VW brand eyes Q4 profit, sales growth on cost cuts, new models

Volkswagen said fourth-quarter profit and sales at its largest division may keep growing on cost cuts and demand for new models, after core earnings doubled in the July-to-September period.

Operating profit at VW’s namesake brand in the three months ended Sept. 30 doubled to 728 million euros ($847 million) as the unit pushes cost reductions and trims headcount as part of a turnaround plan agreed with labour unions last year.

The world’s largest automaker said on Monday it expects the positive business development of the first nine months at its core division to continue over the remainder of the year, without being more specific.

By contrast, Volkswagen’s luxury division Audi said on Monday is expects a challenging final quarter as costs for upcoming model launches weigh on results.

The VW brand now expects the operating margin to moderately exceed a 2.5-to-3.5 percent target range, Volkswagen said, after previously guiding for the profitability benchmark to come in at the upper end of that corridor.

That is in line with the more upbeat profit outlook announced by parent Volkswagen on Friday.

“Our model offensive is increasingly paying off, the turnaround programmes in the markets are having an effect,” VW brand Chief Executive Herbert Diess said in a statement. “By and large, the strategic repositioning of the brand is showing good results.”

Fixed costs at the VW brand were flat in the July-to-September period despite growing model launches, the carmaker said, without being more specific.

New models by VW brand launched this year include the top-of-the-line Arteon fastback and the redesigned Polo subcompact.

($1 = 0.8598 euros)

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