VW profits crash

Europe's biggest carmaker Volkswagen has hit the skids this year with "extremely weak" economic conditions slashing profits and sending sales down sharply, results showed Wednesday.

VW profits crash
Photo: DPA

The German firm said net profit slumped 74 percent year-on-year to €243 million ($314 million) in the first three months of the year while revenues fell 11.2 percent to €24 billion.

Without a €600-million gain from the sale of a Brazilian unit VW would have made an operating loss instead of a profit, and excluding the firm’s Swedish trucks and buses unit Scania, sales fell an even sharper 17.2 percent.

Even including the Brazilian windfall, operating income was less than a quarter of what it was a year ago, falling to €312 million from €1.3 billion in the first three months of 2008.

Pre-tax profit was also a fraction of what it was a year earlier, falling to just €52 million from €1.4 billion.

The number of vehicles sold dropped by 15.7 percent to €1.35 million while production slumped by almost a quarter – 24.1 percent – to €1.25 million. Deliveries to customers fell 10.7 percent to 1.4 million vehicles.

Looking ahead, VW said it did not expect business to improve any time soon and that unit sales, revenues and profits – the latter hit by higher costs for refinancing its debts – would be lower for 2009 than in previous years.

“The high volatility of market developments does not permit any reliable forecasts to be made … Based on the extremely weak business in the first three months of 2009, we continue to expect that our earnings will not reach the level of previous years,” VW said.

Other car firms must be having an even tougher time, though. VW said it performed better than the overall global passenger car market – which shrank 20.7 percent in the first quarter.

VW said that deliveries were higher than the same time period last year in the key emerging markets of China, Brazil and Russia – as well as in Germany, where sales have been boosted by a government car scrapping scheme.

It said that it is well positioned to win further market share in the future in “key regions of the world,” helped by numerous upcoming new car launches that will extend its product portfolio and cover new market segments.

The company said its nine-brand range comprises more than 130 vehicles that emit less than 140 grams of carbon dioxide per kilometre and that its new small Polo model had impressed trade press and customers at its recent premiere.

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From lizards to water, eco-bumps snag Tesla’s giant Berlin car factory

In the green forest outside Berlin, a David and Goliath-style battle is playing out between electric carmaker Tesla and environmental campaigners who want to stop its planned "gigafactory".

From lizards to water, eco-bumps snag Tesla's giant Berlin car factory
Tesla's gigafactory outside the doors of Berlin. dpa-Zentralbild | Patrick Pleul

“When I saw on TV that the Tesla factory was going to be built here, I couldn’t believe it,” said Steffen Schorch, driving his trusty German-made car.

The 60-year-old from Erkner village in the Berlin commuter belt has become one of the faces of the fight against the US auto giant’s first European factory, due to open in the Brandenburg region near Berlin in July.

“Tesla needs far too much water, and the region does not have this water,” said the environmental activist, a local representative of the Nabu ecologist campaign group.

Announced in November 2019, Tesla’s gigafactory project was warmly welcomed as an endorsement of the “Made in Germany” quality mark – but was immediately met with opposition from local residents.

Demonstrations, legal action, open letters – residents have done everything in their power to delay the project, supported by powerful
environmental campaign groups Nabu and Gruene Liga.

Tesla was forced to temporarily suspend forest clearing last year after campaigners won an injunction over threats to the habitats of resident lizards and snakes during their winter slumber.

READ MORE: Is Germany’s Volkswagen becoming ‘the new Tesla’ as it ramps up e-vehicle production?

And now they have focused their attention on water consumption – which could reach up to 3.6 million cubic metres a year, or around 30 percent of the region’s available supply, according to the ZDF public broadcaster.

The extra demand could place a huge burden on a region already affected by water shortages and hit by summer droughts for the past three years.

Local residents and environmentalists are also concerned about the impact on the wetlands, an important source of biodiversity in the region.

Tesla Street

“The water situation is bad, and will get worse,” Heiko Baschin, a spokesman for the neighbourhood association IG Freienbrink, told AFP.

Brandenburg’s environment minister Axel Vogel sought to play down the issue, saying in March that “capacity has not been exceeded for now”.

But the authorities admit that “the impact of droughts is significant” and have set up a working group to examine the issue in the long term.

The gigafactory is set to sprawl over 300 hectares – equivalent to approximately 560 football fields – southwest of the German capital.

Tesla is aiming to produce 500,000 electric vehicles a year at the plant, which will also be home to “the largest battery factory in the world”,
according to group boss Elon Musk.

In a little over a year and a half, swathes of coniferous forest have already been cleared to make way for vast concrete rectangles on a red earth base, accessed via the already iconic Tesla Strasse (Tesla Street).

German bureaucracy

The new site still has only provisional construction permits, but Tesla has been authorised by local officials to begin work at its own risk.

Final approval depends on an assessment of the project’s environmental impact – including the issue of water.

In theory, if approval is not granted, Tesla will have to dismantle the entire complex at its own expense.

But “pressure is being exerted (on the regulatory authorities), linked to Tesla’s significant investment”, Gruene Liga’s Michael Greschow told AFP.

In early April, Tesla said it was “irritated” by the slow pace of German bureaucracy, calling for exceptions to the rules for projects that help the environment.

Economy Minister Peter Altmaier agreed in April that his government “had not done enough” to reduce bureaucracy, lauding the gigafactory as a “very important project”.

Despite Germany’s reputation for efficiency, major infrastructure projects are often held up by bureaucracy criticised as excessive by the business community.

Among the most embarrassing examples are Berlin’s new airport which opened last October after an eight-year delay and Stuttgart’s new train station, which has been under construction since 2010.

Brandenburg’s economy minister, Joerg Steinbach, raised the possibility in February that the Tesla factory could be delayed beyond its July planned opening for the same reason.

SEE ALSO: Tesla advertises over 300 jobs for new Gigafactory near Berlin