German automaker Volkswagen will reinforce steps to boost earnings in coming years as its long-planned target to increase sales to over 10 million cars a year is almost met.
Group sales were up 4.7% in the first two months of 2014 at 1.47 million autos, excluding heavy trucks, making it likely VW will reach its 10 million goal outlined in 2007 this year, four years earlier than originally planned, chief executive Martin Winterkorn said.
But operating profit at the multi-brand group edged up only 3.5% in the past three years to 11.7 billion euros ($16.27 billion) in 2013, held back by spending on technology and models, while sales surged 24% to 197 million euros. “We’re now focusing more strongly on qualitative goals,” Winterkorn said at VW’s annual press conference. “More than ever before, our objective is qualitative growth.”
Wolfsburg-based VW has used resilient profits to boost investment during a European recession that plunged French and Italian peers into the red.
But generating cash to fund global expansion is getting harder as VW balances rising short-term costs, such as 4.6 billion euros in 2013 negative currency effects, with upgrades and additions to a fleet of more than 310 models.
The push for greater efficiency at Europe’s largest automotive group echoes a call by the CEO last month on senior managers to keep costs down as the company prepares for another year of tough market conditions.