Volkswagen Expected to Meet Profit Target

by : Anthony Fontanelle

The largest European automaker Volkswagen AG is expected to meet its profit target - something that American automakers have failed in the past years. The famed automaker has set a goal of amassing 5.1 billion euros in sales this year. That figure is for profit before taxes. In US dollars, that figures equates to about $7 billion.

A newsletter from AIADA says that the goal will be reached by the European automaker a year early. The reason for the expected attainment of the company's profit goal is its cost cutting measures. The step taken by the automotive giant has led to increasing the value of shares for the company.

Aside from the prediction that Volkswagen will reach its profit target, it is also expected that the company will reach record sales this year. If the current trend continues regarding the sales output of Volkswagen AG, the automotive company will be selling more than 6 million vehicles all over the world.

Concerning the predictions on the success of the automaker, Volkswagen released a statement which says: "The increase in unit sales and the continuous optimization of cost structures will lead to a sustainable improvement in competitiveness and our earnings power."

Aside from Volkswagen, other European automakers are also expected to post increased sale for this year. French Renault has already reached their sales target for the first half of the year and is on track to reach their target for the entire year. Fiat is also joining other European automakers having success in the auto market.

What this means is that while the demand for more fuel efficient vehicles increases, the demand for European cars have not declined. European automakers after all are already making headway in the development of environment-friendly vehicles. In this quest for the development of eco-friendly vehicles, European cars are still known for their performance. Thus Volkswagen and Renault are careful to develop new vehicles which will not only be of high performance but also fuel efficient.

By manufacturing quality auto parts such as and other electronics and mechanical auto parts, Volkswagen continues their tradition of being the first choice of many car buyers. The introduction of different auto modes catering to the needs of various auto buyers, Volkswagen continues its strong hold on its large buyer base.

The European automaker announced that they have sold 3.09 million vehicles around the world for the first six months of the year. That first half sales output by Volkswagen shows an increase of 7.8 percent compared to the number of vehicles they have sold around the world for the first six months of last year. The world's fourth largest automaker led all European auto firms in sales increase for the first half of the year.

The sales increase for Volkswagen is driven by growing demand for Volkswagen vehicles in Asia and South America. And with Volkswagen expected to reach a deal with the Malaysian government as to the purchase of the majority of Malaysian automaker Proton, sales in Asia of Volkswagen AG is expected to increase still.

Under the deal, it is expected that Volkswagen will be marketing Proton vehicles outside Asia while Proton will be helping Volkswagen increase its presence in the Malaysian auto market. Although the share of Proton in the Malaysian auto market is on the decline, the involvement of a prestigious brand such as Volkswagen can also increase the sales output of the car company in the said Asian country.