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Record profit for Volkswagen

Big ambitions: Volkswagen Group chairman Martin Winterkorn pictured at the recent Geneva motor show.

VW aims to be ‘greenest’ as well as biggest car-maker on the back of record profits

13 Mar 2012

VOLKSWAGEN Group has posted a record operating profit for 2011 and says it will do the same this year on the back of another 40 additional, new or upgraded models, including next-generation volume-sellers in the new Audi A3 and VW Golf.

Not content with its aim to be the world’s biggest car-maker by 2018, the Volkswagen Group now also says it wants to be the ‘greenest’, investing a staggering €62.4 billion ($A77.9b) to reduce the average CO2 emissions of its European model range to less than 120g/km by 2015.

VW has pledged to reduce its new vehicle fleet’s CO2 emissions by 30 per cent between 2006 and 2015 (falling short of Mazda’s, which calls for the same corporate-average CO2 cut but in two fewer years, between 2008 and 2015), and to make every new model 10 to 15 per cent more efficient than the generation it replaces.

Europe’s largest car-maker said it would spend well over two-thirds of the investment – plus an additional €14b ($A17.5b) in China – directly or indirectly on more efficient vehicles, powertrains and technologies, as well as environmentally friendlier production at its plants.

To that end, the German giant says it will increase the environmental ‘compatibility’ of VW Group production by 25 per cent (meaning it will reduce energy and water consumption – as well as waste and emissions production – by a quarter) by 2018.

 center imageFrom top: All-new Audi A3, Audi A5, VW Tiguan and e-Up.

VW said it would invest €600 million ($A750m) to expand the use of renewable energies such as wind, solar and hydroelectric power at its plants, with the aim of reducing by 40 per cent the greenhouse gas emissions associated with production-related energy supplies by 2020.

“Geneva 2012 marks the start of a fundamental ecological restructuring of the Volkswagen Group,” said company chairman Martin Winterkorn when he announced the ambitious green targets at the Geneva motor show on March 6.

“Our declared goal is to make Volkswagen the leading auto-maker in ecological terms, too. That is the fundamental element and core of our Strategy 2018.”

Dr Winterkorn said VW’s new modular transverse matrix (MQB) platform, which will underpin as many as 40 different models and four million annual vehicle sales by 2018, will be key to the company’s improved vehicle and production efficiency.

“Based on the MQB, the Volkswagen Group’s efficiency technologies will be available as standard in all new models over the coming years. The next big milestones this year are the Audi A3 and our best-selling model, the Golf.”

Leaving no doubt about how VW will pay for the unprecedented product and production investment, Dr Winterkorn then used a press conference at VW’s Wolfsburg HQ to announce a 59 per cent year-on-year net profit in 2011.

VW’s full-year net profit more than doubled, from €6.8b ($A8.5b) to €15.4b ($A19.2b), in part due to gains in the valuation of VW’s share options on highly profitable Porsche, which it plans to make its 10th fully integrated vehicle brand soon.

VW aims to be just as profitable this year – even as the European car market declines – before increasing operating profit in 2013 (when the VW brand also expects to return to profit in the US for the first time since 2002), according to the company’s annual report.

“Despite all the uncertainties, we remain cautiously optimistic for the coming months,” said Dr Winterkorn in a speech at Wolfsburg. “Our goal for operating profit is to repeat the high level we achieved in 2011.”

Dr Winterkorn said VW was off to a flying start in 2012, with global sales up 7.7 per cent in the first two months.

“This year we will again be launching 40 new models, successors and product enhancements across the group. As a result, we expect to increase deliveries year-on-year.”

The outspoken VW chief declared 2013 the “year of e-mobility” for his company, which will release the e-Up, followed by other all-electric or part-electric models across the Group.

Volkswagen Group sold a record 8.27 million vehicles in 2011 (15 per cent more than in 2010), thanks in part to expanded production of SUVs such as the VW Tiguan and Audi Q5 to meet demand in the US and China, the group’s single biggest market.

VW passenger car sales rose 13.1 per cent to 5.1 million cars, while Audi sales lifted from 1.1 to 1.3 million, Skoda was up 15.3 per cent to 879,000, Bentley increased by 36.9 per cent to 7003 and Lamborghini was up 23 per cent to 1600.

Seat was the only VW Group brand to post an operating loss.

Dr Winterkorn also scored a personal windfall in 2011, when his pay nearly doubled from €9.3 million ($A11.6m) in 2010 to €17.5 million ($A21.8m) in fixed salary, bonuses and profit incentives – more than any other chief executive among the top 30 companies listed on Germany’s DAX index.

According to its annual report, chief financial offer Hans Dieter Poetsch was VW’s second-highest-paid executive on the company’s eight-member management board, total compensation for which spiked by 92.4 per cent to €70.6m ($A88.1m) last year.

VW aims to sell more than 10 million vehicles a year to overtake General Motors and Toyota as the world’s biggest auto-maker by 2018.

In the meantime, it plans to increase its global workforce by more than 50,000 – up from more than 500,000 currently – and to increase the number of its factories from 62 to about 70.

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