Cost cutting and new models including the Arteon fastback should continue to increase Volkswagen’s main car brand in the 4th quarter after it doubled core incomes in July-September, it stated on Monday.
Experts see restoring the Volkswagen brand, which has long struggled with high personnel and development costs, as important to the group’s ability to recover from its diesel emissions scandal.
The brand stated on Monday it anticipated sales and revenues to keep growing in October-December, despite the hit throughout the industry to demand for diesel automobiles and their resale value following the emissions scandal.
“Our model offensive is progressively paying off, the turnaround programs in the markets are having an effect,” VW brand chief Herbert Diess stated.
Operating profit at the brand increased twice to 728 million euros ($847 million) in the 3 months to September 30, assisted by cost cuts and staff reductions agreed with labor unions in 2016.
By contrast, Volkswagen’s premium Audi division informed it was bracing for a “demanding quarter” with costs for vehicle overhauls including the high-end A6, A7 and A8 in addition to the Q3 and A1 compacts weighing on results.
Audi’s quarterly revenue and sales were broadly flat, kept back by spending on foreign capacity and electrification of its model fleet.
The Volkswagen brand name now expects its operating margin to reasonably exceed a 2.5-3.5 percent target range this year, it stated.
That remains in line with the more upbeat earnings outlook announced by parent Volkswagen on Friday.