VW brand upbeat as cost cuts, new models boost Sept quarter earning

Cost cutting and new models such as the Arteon fastback should continue to boost Volkswagen's main car brand in the fourth quarter after it doubled core earnings in July-September, it said on Monday.

Analysts see reviving the VW brand, which has long suffered from high staff and development costs, as crucial to the group's ability to recover from its diesel emissions scandal.

The brand said on Monday it expected sales and profits to keep growing in October-December, despite the hit across the industry to demand of diesel vehicles and their resale value in the wake of the German carmaker's 2015 scandal.

"Our model offensive is increasingly paying off, the turnaround programmes in the markets are having an effect," VW brand chief Herbert Diess said in a statement.

Operating profit at the brand doubled to 728 million euros ($847 million) in the three months to Sept. 30, helped by cost cuts and staff reductions agreed with labour unions last year.

Volkswagen shares were up 2.9 per cent to 156.40 euros at 1150 GMT.

By contrast, the group's premium Audi division said it was bracing for a "demanding quarter" with costs for vehicle overhauls including the high-end A6, A7 and A8 as well as the Q3 and A1 compacts weighing on results.
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European carmakers face electric reality to outlaw combustion engine

European car bosses are beginning to address the realities of mass vehicle electrification, and its consequences for jobs and profit, their minds focused by government pledges to outlaw the combustion engine.

As the latest such announcement on Monday by China added momentum to a push for zero-emissions motoring, Daimler, Volkswagen and PSA Group gave details about their electric programmes that could give policymakers some pause.

Planned electric Mercedes models will initially be just half as profitable as conventional alternatives, Daimler warned - forcing the group to find savings by outsourcing more component manufacturing, which may in turn threaten German jobs.

"In-house production is almost irrelevant to the consumer," Daimler boss Dieter Zetsche told reporters on the eve of the Frankfurt auto show, in the midst of a German election campaign in which automotive jobs have loomed large.

The company set a target of saving 4 billion euros ($4.8 billion) by 2025 to help fund the cost of its electric cars.

"Daimler is the first company to state explicitly how much electric vehicles are going to hurt margins," said Bernstein analyst Max Warburton. "It was brave to go first - but of course it won't be the last."
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Volkswagen has no plans to divide the group, says CEO

Volkswagen has no plans to follow local rival Daimler in considering changing the group's legal structure, its chief executive said, even as the company undergoes the biggest transformation in its history.

The world's largest vehicle maker by sales said on Monday it was stepping up the pace on its electric car programme, announcing more than 20 billion euros ($23.86 billion) of new investments over the next 12 years.

Daimler said in July it may split parts of its business into separate legal entities, a move that investors have said could unlock billions of euros in value by listing separate parts of the business and help fund its development of electric and robotic cars.

Asked by reporters at the Frankfurt auto show whether he could imagine following rivals in looking at changing the group's structure, VW Chief Executive Matthias Mueller said: "Others are always faster than Volkswagen but, somehow, we are still successful."

"No, one of my major tasks is to always and again look into such matters and reflect on the situation," he added. "That is what we do and what I do with all authority and calm. And I will not let anyone push me."

A broader move by VW to create a holding structure could unlock an incremental 50 billion euros in value, on top of the group's 68 billion in market capitalisation, analysts at research firm Evercore ISI said in a note.
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Volkswagen looks at rehiring Opel CEO: Source

Carmaker Volkswagen is looking at rehiring the chief executive of General Motors' Opel, possibly to lead its Audi brand, a source familiar with the matter told Reuters on Sunday, following a media report the executive will quit Opel.

Opel boss Karl-Thomas Neumann plans to resign as General Motors (GM) prepares to sell the business to France's PSA Group, German newspaper Frankfurter Allgemeine Sonntagszeitung (FAS) reported over the weekend.

Without citing its sources, the newspaper said Neumann saw the sale as the right strategic step, but was concerned PSA under-estimated the growing importance of electric cars.

The source said Volkswagen (VW) bosses were informally discussing giving Neumann, who quit VW in 2013 for the Opel top job, a prominent position, potentially as head of premium brand Audi.

VW and Opel declined to comment.

Audi CEO Rupert Stadler has come under fire for how he has handled the fallout from VW's diesel emissions scandal.

He only received a five-year contract extension last month because of an agreement among supervisory board members that he would not serve out his full term, two sources have told Reuters.

Pressure has built on Stadler after Munich prosecutors widened an investigation into the premium carmaker, and after Germany's transport ministry accused Audi of cheating on emissions tests.

In an interview with trade publication Automobilwoche, Stadler over the weekend defended his record: "The diesel crisis has consumed and is still consuming resources. I'm still convinced that we have initiated the right strategic steps."

Neumann, 56, planned to inform Opel's supervisory board about his decision at its next meeting on June 22, FAS said, adding he wanted to stay on only until GM completed the sale of Opel to PSA, owner of the Peugeot, Citroen and DS brands.

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