Folks Wagen Their Tails
Although Volkswagen is Europe’s leading automotive company, this protected them from feeling the effects of Europe’s troubled market where car sales have dropped to the lowest point in decades. Up until now, Volkswagen had not really felt the full force of Europe’s financial crisis compared to other companies because of their size and strong presence in China and the United States. Their shrinking profit margins are an indication of the steep decline in car sales as well as intense price competition. Thus, Volkswagen joins the list of foreign and United States automakers that are struggling in Europe, where car sales dropped 10 percent during the first quarter, the big hit being double-digit decreases in France, Germany and Spain. Now most automakers are wagging their tails relying on sales in the United States in order to make up for their losses.
VW’s chairman, Martin Winterkorn noted ““The coming months will be anything but easy,” and “The current environment is definitely a tough challenge for the entire industry. Suprisingly, its after-tax profit fell 38 percent, to 1.95 billion euros ($2.5 billion) in the first quarter even though their revenues only fell 1 percent to 46.6 billion euros.
Written by Kevin Zhang