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VW Sees No Slowdown in Demand

August 19, 2011
3 min to read


FRANKFURT — Volkswagen AG's top labor representative and deputy supervisory board chairman Bernd Osterloh says demand for the company's cars is holding up despite signs of slowing growth in Europe and the U.S., and the company has had to introduce extra shifts in its plants to produce enough vehicles.


"There is no sign that demand is slowing," Mr. Osterloh told reporters late Wednesday. He said the company is struggling to keep up with strong demand and its order intake is enough to keep the company in full production for the rest of this year, reported The Wall Street Journal.

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Mr. Osterloh also said Volkswagen, Europe's largest auto maker, is able to react if recession fears materialize and auto markets slump. The company "could easily react to [sales]-volume declines in the two-digit [percentage range]," he said.


"If a crisis is coming, we'll [still] meet our sales-volume target [for] 2018. If there is no crisis, we'll reach this goal earlier," he said, referring to Volkswagen's long-term plan to sell more than 10 million cars and trucks by 2018 as part of its bid to become the world's largest auto maker.


After posting strong first-half earnings last month, Volkswagen and other auto makers reported that the global economic environment had worsened in the course of this year.


Memories are still fresh of the last market slump in 2008, when demand for cars slid amid recession as unemployment rose and credit dried up. But surging sales in emerging markets, particularly in China, helped the auto industry stage a faster-than-expected recovery over the past two years.


Volkswagen is aiming to sell a record eight million cars and trucks in 2011, according to comments made by Chief Executive Martin Winterkorn last month.

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The company's core VW passenger-car brand posted a 13 percent sales increase in the first seven months compared with the same period last year. The January-to-July sales figures for the whole group are expected to be released in coming days. Sales numbers for August, however, when the market turmoil highlighted growing economic concerns, won't be released for another two or three weeks.


Volkswagen is benefiting from its large footprint in emerging markets such as China, Brazil and Russia, but the company has also posted solid gains in the U.S. and the anemic European market in recent months.


Thanks to a healthy balance sheet, a strong presence in dynamic markets and a sophisticated system to leverage significant economies of scale between its numerous brands, many analysts view Volkswagen as well-positioned to benefit from growing demand for cars worldwide and more resilient to a possible market downturn than most peers.


Mr. Osterloh reiterated that labor unions want to take a voting stake of up to 3 percent in the company this year, but noted that reaching an agreement with the management is taking longer than expected.


He said VW won't issue new shares with voting rights, but a solution could possibly be found using the company's free float of available common shares.

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VW's freefloat fell below 10 percent during a takeover battle with Porsche Automobil Holding SE and the shares were subsequently replaced in the German DAX30 bluechip index by preference shares, which don't carry voting rights.

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