Volkswagen brand slides to 1st quarter loss

VolkswagenWolfsburg, Germany - Germany's biggest carmaker said Wednesday that its core Volkswagen brand posted an operating loss of 279 million euros (368 million dollars) in the first quarter of 2009. The company said sales of VW models slumped 15 per cent to 765,000 and turnover dropped 20.8 per cent to 14.3 billion euros as worldwide demand for cars dropped in the face of the global economic downturn.

The 1st quarter loss compared to an operating profit of 461 million euros in the same quarter of 2008.

Volkswagen's Spanish subsidiary Seat posted a loss of 145 million euros compared to a a profit of 12 million euros in the first quarter of 2008.

Earlier this week, the Volkswagen Group's premium brand Audi announced that 1st quarter earnings fell to 363 million euros, a slump of nearly 30 per cent from a year ago.

The VW group was saved from going into the red by profits made from the sale of the company's Brazilian truck-making unit to German company MAN.

The group's operating result was 312 million euros, a 76 per cent drop from the 1.3 billion euros achieved in the first quarter of 2008.

VW said the group hoped to turn in a profit for the year despite the uncertain outlook.

Following disclosure of the figures, Volkswagen shares lost 0.88 per cent on the Frankfurt stock exchange to stand at 241 euros at midday.

Germany's car industry has been badly hit by the recession, with many companies forced to lower their sales targets and put thousands of workers on reduced hours at lower pay.

Makers of small cars have been helped by government bonus schemes to scrap their old cars for environmentally friendly new ones, but premium car sales have barely responded to the handouts.

Daimler AG, the maker of luxury Mercedes Benz vehicles Tuesday announced a 1.3-billion-euro loss in the first quarter, after clocking up a 1.3-billion euro profit in the same period of 2008.

The first-quarter red ink comes atop the 1.5 billion euros which Daimler had lost in the fourth quarter of 2008 with the group warning it faced the prospects of a loss in the second quarter.(dpa)

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