VW model says profitability drive faces price dangers

WOLFSBURG, Germany (Reuters) – Volkswagen’s (VOWG_p.DE) core autos division mentioned prices for its electric-car program, expertise and a brand new emissions testing process will stand in the best way of main profitability positive factors this yr and in future.

FILE PHOTO: The brand of Volkswagen is seen throughout the 88th Worldwide Motor Present at Palexpo in Geneva, Switzerland, March 6, 2018. REUTERS/Denis Balibouse

VW’s namesake model expects its working revenue margin to climb to between four and 5 % this yr, a variety additionally it is focusing on for 2020, the carmaker mentioned on Wednesday.

Value reductions, efforts to weed out complexity in components and fashions and rising gross sales of higher-margin sport-utility automobiles helped to greater than double the profitability benchmark to four.1 % final yr.

However VW on Wednesday damped hopes for additional important profitability positive factors.

“This yr and over the following few years, the model will face extreme challenges regardless of its improved competitiveness,” VW mentioned, citing prices for electrical automobiles, expertise and the brand new WLTP testing process for emissions and gasoline consumption.

Reporting by Andreas Cremer; Modifying by Victoria Bryan

Yasir Ali
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