Whats Up With Volkswagen?

By: Rain Stockton

Europe's largest automaker and producer of top-of-the-line , , Volkswagen has recently reported that they have obtained an increase in the second-quarter profit by 16 percent attributed to new models from brands Skoda and Audi.

Bloomberg News has conducted a survey that is participated by 11 analysts who has given their media estimate resulting to Volkswagen's net income increased that reached 1 billion euros or $1.38 billion from the previously obtained 859 million euros net income last year.

Banks were also made to participate in the survey namely Bankhauz Metzler, M.M. Warburg, JPMorgan, Societe Generale, Morgan Stanley, UBS, UNicredit, Bankhaus Lampe, DZ Bank, ABN Amro and EXane BNP Paribas.

Volkswagen to Develop a New Car in China in a Joint Venture with Shanghai Volkswagen
In other news, Volkswagen has recently signed a contract with one of its China joint ventures, the Shanghai Volkswagen. The agreement is will create a joint venture aimed for the production of a new car that would become the replacement model for the Passat brand.

In a statement released by Volkswagen, the automaker said, "It's the first time for the venture to take a role in the development work of a car sold to the international markets."

It also added that the new car which is scheduled to be launched as early as 2009 will be produced primarily for both North America and China markets. Shanghai Volkswagen is a 50/50 joint venture between Europe's largest automaker, Volkswagen and China's largest automaker, the Shanghai Automotive Industry Corporation.

And earlier this week, the Japanese automaker Honda Motor Co. has also boosted its China presence. The Guangzhou Honda Automobile Co. Ltd, in which Honda has a 50/50 joint venture with Guangzhou Automobile Group has developed a wholly-owned research and development unit in China as preparation for the development of the China-specific Guangzhou Honda brand.

The total investment in Guangzhou Honda's research and development unit is around 2 bln yuan that is according to Honda.

Volkswagen Hoping to Break-Even in 2009
Dow Jones Newswires has reported last Friday that Volkswagen AG is hoping to break-even in 2009 or earlier that is according to Volkswagen's Chief Labor Representative Bernd Osterloh.

Mr. Osterloh said that he positive that the automaker can really achieved its target of break-even but he also said that reaching such goal may prove to be difficult unless the productivity is increase and purchasing cost is reduced. He also stressed that purchasing local auto components should be considered by the automaker since it can help in reducing production cost.

Mr. Osterloh also said that North America would become the company's central market in the future. And as evidence of this plan, Volkswagen has already sent one of its best man for the North American market, Mr. Stefan Jacoby who would assume the position of Chief Executive of Volkswagen of America this September 1, 2007. For the US market models that are similar to the Passat or the Jetta are in line for production.

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