VW brand CEO sees new
models driving profit and sales
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[June 16, 2017]
BERLIN
(Reuters) - Volkswagen is making headway with efforts to raise
profitability at its troubled core brand and expects strong business
next year thanks to a raft of new models, the division's top executive
said.
The world's largest automaker's core division is being restructured with
thousands of job cuts and retrenchments in parts and vehicle development
as it struggles to fund a post-dieselgate shift to electric cars and new
technologies.
More than 10 new models launched this year including the top-of-the-line
Arteon fastback and a redesigned Polo subcompact, one of VW's all-time
bestsellers, would stoke demand and underpin the turnaround, VW brand
chief executive Herbert Diess told Reuters on Friday.
"We are making good progress," Diess said during an event to present the
next-generation Polo. "2018 will be a strong year for VW," he said,
adding a new product always helped margins.
VW brand's operating margin jumped to 4.6 percent in the first quarter
from 0.3 percent a year earlier, still lagging French rivals PSA Peugeot
Citroen <PEUP.PA> and Renault <RENA.PA> but nearing its long-term 2025
target of 6 percent.
Diess said VW had a goal for 2017 to maintain the brand's first-quarter
performance when operating profit surged to 869 million euros from 73
million a year ago.
"The most important thing is the product offensive in coming months,"
Diess said.
Wolfsburg-based VW is counting on the larger, technology-packed Polo
model to revive its sluggish sales in the core European market where the
brand's deliveries slid 0.2 percent in the January-to-May period to
726,000 cars.
The new Polo, priced from 12,975 euros ($14,500) and due to hit
showrooms in October, will be the main volume product VW launches this
year, preceding the all-new T-Roc, a Golf-sized sport utility vehicle
(SUV) which is due out later in 2017.
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Herbert Diess, chairman of the board of Volkswagen, presents the new
Volkswagen Polo car during the World premiere of Volkswagen's new
Polo in Berlin, Germany June 16, 2017. REUTERS/Stefanie Loos
A spokesman declined to specify the new Polo's on-road nitrogen oxide (NOx)
emissions and whether they met EU targets, saying VW at this point only
had emissions estimates for the model which cannot be disclosed.
The advent of the new Polo will intensify the struggle for dominance in
Europe's crowded subcompact segment where the VW model is going up
against a redesigned Ford <F.N> Fiesta and an upgraded Renault
Clio, all vying for the top spot.
Research firm IHS Markit expects the VW model to win easily.
European deliveries of the Polo may jump a quarter to 368,158 cars by
2025 from 293,700 this year, compared with a 2.7 percent gain to 328,846
models for the Fiesta and a 32 percent plunge to 185,525 cars for the
Clio, according to IHS.
Registrations of the Peugeot <PEUP.PA> 208 model may surge a fifth to
277,067 cars, IHS said.
(Reporting by Andreas Cremer and Jan Schwartz; Editing by Edmund Blair)
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