Chad Thomas, Bloomberg
Berlin: Volkswagen AG, Europe’s largest carmaker, plans to focus more attention on boosting sales in the growing Russian and Indian markets to counter the stagnating automobile business in Europe and the U.S.
“We intent on playing a key role in shaping this growth,” Chief Executive Martin Winterkorn said at today’s annual general meeting in Hamburg.
Volkswagen is building assembly plants in Russia and India. The carmaker plans to develop a “small car tailored to the needs of the Indian market” and “produce a vehicle that has been designed for the Russian market,” Winterkorn said.
Chairman Ferdinand Piech replaced Chief Executive Officer Bernd Pischetsrieder in January with Winterkorn, head of Audi, to replicate the division’s success at the group. Volkswagen reported yesterday that first-quarter profit more than doubled to 740 million euros (Rs3,117 crore) after new Audi and Skoda models attracted buyers.
Shares of Volkswagen rose as much as 1.54 euros, or 1.3%, to 116.76 euros and were up 0.6% to 115.92 euros as of 10:38 am in Frankfurt.
Volkswagen released key first-quarter earnings figures ahead of today’s annual general meeting at which Piech is guaranteed of being reelected to another five-year term on the board because the two largest shareholders, who control more than 50 percent of the voting rights, have pledged to support his candidacy.
First-quarter revenue gained 5.1% to 26.6 billion euros, Volkswagen said yesterday. Earnings before interest, tax and special items rose 58% to 1.09 million euros. The company will report complete first-quarter numbers 2 May.
Porsche AG, which is controlled by Piech’s family, last month made a bid for Volkswagen valuing the carmaker at 35.8 billion euros, a low-ball offer designed to leave the sports-car maker with a controlling stake rather than full ownership. Porsche already owns 30.9% of Volkswagen.
Since becoming CEO, Winterkorn, 59, has reorganized management, leading to the departure of Wolfgang Bernhard, head of the namesake brand. Bernhard had been working to develop new models, including a small sport-utility vehicle, a remake of the Scirocco sports hatchback and a new version of the best-selling Golf, all of which are scheduled to come to market in 2008.
Winterkorn has been retooling the models, and planning others, since taking over with his new team.
“The Volkswagen brand deserves our attention, and mine in particular,” Winterkorn said today. “We want it to become more glamorous and have a sharper profile. Over the next 10 years, we want it to develop into the most innovative volume manufacturer, with the best quality in its class.”
Winterkorn reiterated today that pretax profit in 2008 “will be at least” 5.1 billion euros. Volkswagen had a pretax profit of 1.79 billion euros last year.