Volkswagen tempers growth targets

By Elisabeth Behrmann

Volkswagen has offered a tempered earnings and sales forecast for 2018, citing the risk of a “slight” slowdown in the global economic growth that powers the car-buying market.

Volkswagen has offered a tempered earnings and sales forecast for 2018, citing the risk of a “slight” slowdown in the global economic growth that powers the car-buying market.

Operating profit could increase by a fraction of a point to as high as 7.5% of revenue this year, Volkswagen said. Sales will rise 5%, but the forecast depends on a number of factors that could derail its plans.

The world’s biggest carmaker cited a litany of risks — including tightening emissions rules, exchange rate shifts and the harrowing transition car manufacturers are trying to pull off as they switch from combustion engines to more models powered by electric energy.

There’s also the ongoing burden of the diesel-emissions cheating scandal that’s hurt profit the past two years. “We, like the entire industry, are facing major challenges and radical change,” Volkswagen boss Matthias Mueller said.

Volkswagen last year budgeted €20bn through 2030 to develop electric versions of all 300 cars, trucks or buses sold by its dozen brands and buy their batteries.

While its namesake VW brand reached a deal with unions in late 2016 to eliminate tens of thousands of jobs in a drive to maintain earnings, the Wolfsburg-based manufacturer remains legally and financially hampered by its two-year-old diesel-engine manipulation scandal.

Operating profit — excluding special items — last year rose 17% to €17bn, with the margin widening to 7.4% of sales from 6.7% in 2016.

The 2018 revenue forecast compares with a 6.2% jump posted in 2017.

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