Page last updated at 15:41 GMT, Thursday, 11 March 2010

Volkswagen and BMW suffer fall in profits

Martin Winterkorn, CEO of the Volkswagen group, poses in front of a VW Touareg Hybrid car
Volkswagen hopes to overtake Toyota as the world's number one

Europe's biggest carmaker, Volkswagen, has reported an 80% fall in annual net profits to 960m euros ($1.3bn; £872m).

Operating profits also fell, down 71% from a year earlier to 1.9bn euros, while revenues fell 8% to 105bn euros.

Another German carmaker, BMW, also reported a sharp drop in profits for 2009, with net income down 36% to 210m euros.

The firms suffered from the global downturn, although they both enjoyed sales growth in emerging markets.

VW's global sales rose 1.3% to 6.3 million vehicles last year, helped by a 36.7% jump in deliveries to China.

Sales in the German car market rose 17.6% last year on the back of the government's scrappage scheme.

Emerging markets also helped BMW through the downturn, with strong sales growth in Brazil, China and India.

The firm sold 13% fewer cars in 2009 from the year before, but chief executive Norbert Reithofer said adding new models in growing markets would help to drive sales growth this year.

Recovering sales

For the first two months of 2010 sales continued to climb at VW, with worldwide deliveries rising 27%.

"We have no intention of slowing down in 2010," said VW chief Martin Winterkorn.

VW aims to overtake Toyota as the world's number one by 2018, and to help achieve that goal it has been on shopping spree.

It bought the Porsche sports car business for 3.9bn euros last year, and in January it bought nearly 20% of Japanese small car specialist Suzuki for 1.7bn euros.

The firm plans to use a convertible bond issue and a share sale to help finance its planned acquisitions.

Volkswagen also plans to roll out 60 new models and upgrades this year, and it launched nine vehicles at the Geneva motor show last week.

BMW is adding new models, too. They include the 5 Series saloon that hits dealership this month.

Both firms are cautiously optimistic for the current year as they expect a gradual global economic recovery to boost car sales further.

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