China sales help keep VW on the high road

Volkswagen (VW), Europe's biggest car maker, yesterday posted an 80% plunge in 2009 profit — but set out a cautiously optimistic outlook for this year.

Speaking at the group's annual press conference in the German city of Wolfsburg, VW chief Martin Winterkorn called last year "a real test for the entire automotive industry", with Asia's fast-growing car markets helping to offset a drop in sales globally for the company .

Amid signs that the recession was now in retreat, worldwide VW deliveries raced ahead 27% to 1,02- million in the first two months of this year.

"The VW group set a fast pace in the past year and we have no intention of slowing down in 2010," Winterkorn said.

VW plans to introduce a string of new models and updates this year to its stable of brands, which includes Audi, Bentley, Lamborghini, SEAT, Skodia and its flagship VW.

Volkswagen also has ambitions to emerge as the world's top car maker by 2018, replacing Japan's Toyota , which has been hit by questions about the safety of some vehicles.

But highlighting the difficulties faced by the vehicle sector last year, Volkswagen's net profit plummeted to €960m last year, compared with €4,75bn a year earlier.

Sales revenue slipped 7,6% from €114bn to €105,2bn last year, while total global deliveries last year rose 1,3% to 6,3-million vehicles, helped along by a 36,7% jump in deliveries to China.

Deliveries to VW's domestic German market bounded ahead, rising 17,6% last year, bolstered by the government's cash-for-clunkers incentive scheme aimed at encouraging vehicle owners to update their cars to models with improved environmental features.

Underscoring the key role played by the growing demand for cars in Asia, excluding VW's operations in China would have meant that group unit sales would have dropped 6,1%. VW acquired a 19,9% stake in Japanese vehicle group Suzuki at the start of the year.

"Volkswagen's partnership with Suzuki will allow it to make a quantum leap in the mini car segment and in the Asian growth markets," Winterkorn said.

Apart from the fallout for the car business from the global recession, last year represented a turbulent year for Volkswagen, which acquired a 49,9% stake in luxury German sports car maker Porsche as part of moves to integrate the two groups.

Volkswagen shares were trading 1,8% higher at €64,87 in early trading in Frankfurt yesterday.