VW targets India, Russia; 2008 pretax profit to hit $6.92 billion
Leading German automobile manufacturer Volkswagen AG is set to post a pretax profit of at least 5.1 billion euros, or $6.92 billion, in 2008 as higher sales of its cars in Asia, Europe and the United States fuel growth, chief executive Martin Winterkorn told shareholders Thursday.
He also said the German automaker famous for its Beetle will become more involved in the Indian and Russian markets and outlined plans to expand production and sales in both countries, which are seeing a burgeoning demand for new cars.
Winterkorn, speaking at the automaker's annual meeting, did not lay out an earnings goal for this year, which the company said earlier would likely surpass the 4.4 billion euros earned in 2006.
"The Volkswagen group has experienced 12 eventful months," he told the meeting. "The collective wage agreement in October and the return to a five-day week represent a big step toward more competitive labour costs, higher capacity utilization and secure jobs."
The company has spent nearly two years cutting some 20,000 jobs from its German workforce as it strives to become more nimble in the face of rising competition from European and Asian rivals.
Because of the restructuring, the company's workforce was reduced by seven percent to 94,000 employees. Workers at six plants in western Germany also extended their workweek to 35 hours from 28.8 hours.
Winterkorn said the company, which is establishing production in India and Russia, is "working hard there to build a sound position" in both markets.
"India is one of the fastest growing automotive markets worldwide. We are intent on playing a key role in shaping this growth," he said, noting that Volkswagen sells Audis in the country and that some models from its Skoda unit are already built there.
"We will also soon be more heavily involved in the Indian market with the Volkswagen brand. Because of the high tariffs on imported vehicles, however, we will only be able to build a satisfactory presence in India if we also manufacture there directly," Winterkorn said.
He said that is why VW will build a plant near the city of Pune at which it will start producing models including a small car "tailored to the needs of our customers in the Indian market, beginning in 2009."
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