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VW to focus on China, heavy vehicles

Volkswagen, Europe's leading automotive group, announced on Saturday a shake-up to increase its focus on the Chinese market and strengthen its heavy truck and bus sector.

VW to focus on China, heavy vehicles
Photo: DPA

“This fundamental reorganisation is the right response to the increasing challenges,” Volkswagen CEO Martin Winterkorn said in a statement.

“At the same time we are laying the foundations for keeping the group and its brands on their successful course even in a difficult market environment.”

Under the realignment, a new group management department for China will be

set up under Jochem Heizmann, formerly in charge of commercial vehicles, “thus

underpinning the significance of the largest sales market in the world,” the statement said.

“The Volkswagen Group delivered some 2.3 million vehicles in the China region in the 2011 fiscal year and reported a pro rata operating profit there of €2.6 billion ($3.4 billion),” it noted.

On the commercial vehicles side, which VW called “the second pillar” of its success, Leif Oestling, head of Scania, will head a new department to enhance

cooperation between MAN, Scania and Volkswagen Commercial Vehicles to “harness the substantial worldwide growth potential in this segment.”

Volkswagen also announced a major reshuffle of top managers within the group from September 1 affecting brands including MAN, Scania, Audi, Bentley and Bugatti.

It said all the appointments had been made within the company, “including three female top managers who will assume responsibility at brand board of management level.”

Winterkorn said: “Our clear goal is to continue our successful course of recent years with great momentum and stability. I am convinced that now more than ever, the Volkswagen Group has the right people in the right positions to make our Strategy 2018 a success.”

While all VW brands have a high degree of operational autonomy and responsibility, “we are now further intensifying knowledge transfer and management links within the Group,” he added.

In April Volkswagen, whose makes also include Skoda and SEAT, said that profits raced ahead in the first three months of this year, driven by strong demand worldwide for all of its brands.

Net profit soared 86 percent to €3.186 billion, while operating profit, increased 10.2 percent to €3.209 billion as the auto giant sold 11.3 percent more vehicles – 2.26 million worldwide – in the three-month period, it said.

AFP/mw

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ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

READ ALSO:

With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

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