VW: A car company that works
Filed under: Company News, Earnings
Almost every major car company in the world lost money in the latter part of 2008 and most are projected to lose money in 2009. The industry's struggle with low sales due to the recession has caused GM and Chrysler to go under. Even the largest and by many measures most successful auto firm in the world, Toyota (TM), has struggled.
Volkswagen has done better than its peers. The largest car company in Europe expects to have a good Q2. "We will surely end with a positive result," VW's chief financial officer Hans Dieter Poetsch told Reuters, referring to the second quarter.
The secret of VW's success is partially cost cuts, partly its international footprint, and partially its product mix. VW has sharply cut production and inventory, making it more likely that it can make money on each unit sold. VW has a strong presence in China, the fastest growing large car market in the world and, based on most numbers, a market which now generates more sales a month than the US.
VW also has a fleet of relatively small, fuel-efficient cars. Some of its diesel models get over 40 MPG.
Hopefully, the lesson of VW is that car companies, at least those that are well run, can actually make money.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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