Home / Business News / VW brand lifts midterm profit outlook on higher-margin vehicles, cost cuts

VW brand lifts midterm profit outlook on higher-margin vehicles, cost cuts

WOLFSBURG, Germany (Reuters) – Volkswagen’s (VOWG_p.DE) core automobiles department has raised its midterm outlook for profitability on cost cuts and a deliberate rollout of higher-margin fashions, and expects deliveries to hit a brand new document this 12 months.

A Volkswagen brand is pictured on the International Auto Show in Mexico City, Mexico November 23, 2017. REUTERS/Henry Romero

VW’s namesake brand on Thursday mentioned it expects the running profit margin to climb to between four and five p.c by way of 2020, after up to now guiding for that benchmark to hit four p.c or extra on the finish of the last decade.

The global’s greatest automaker plans to extend the proportion of sport-utility automobiles (SUVs) of its general deliveries to about 40 p.c by way of 2020 from these days 14 p.c.

Persistent call for for SUVs will lend a hand VW brand this 12 months to overcome the 2016 deliveries document of five.99 million vehicles, the carmaker mentioned with out being extra particular. Ten-month gross sales have been up greater than three p.c at five.04 million.

The VW brand, which has been present process heavy restructuring for roughly a 12 months, mentioned it has stored mounted prices extensively strong this 12 months in spite of rising spending on style launches.

The carmaker mentioned it is going to understand three,800 activity cuts in Germany by way of the tip of 2017, a 12 months after it agreed with unions to slash 23,000 positions by the use of herbal attrition by way of 2020.

“We have completed the first five kilometers of a marathon,” VW brand leader govt Herbert Diess mentioned. “We are all aware of the challenges that lie ahead of us.”

Reporting by way of Andreas Cremer; Editing by way of Arno Schuetze

Our Standards:The Thomson Reuters Trust Principles.

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