CZECH REPUBLIC/GERMANY: Scrappage schemes boost Skoda as Audi buoys VW group

30 October 2009 | Source: just-auto.com editorial team

Car sales at Volkswagen's Czech unit Skoda Auto rose 6.5% in the third quarter halting a first half decline as scrappage subsidies in Germany, its biggest market, and growing business in China pushed sales to 174,984 vehicles.

With the German subsidy expiring at the beginning of September, Skoda said it expected fourth quarter sales to roughly match last year's with performance next year "hard to predict".

Over the first nine months of this year Skoda's sales fell 5% to 504,625 vehicles while global car production shrank by 11.9% compared with the same period a year ago. It reported net profit for the period down 67.5% to US$155.5m.

Skoda is the Czech Republic's largest company by sales with revenue equivalent to 5% of the country's GDP so its performance is an indicator for the country's overall economy, which hinges on the export of cars, car parts and electronics.

GDP in the Czech Republic shrank by 5.5% in the second quarter when the economy bottomed out - the deepest slump on record.

Meanwhile VW's premium Audi brand expects its fourth quarter operating profit to exceed the EUR348m (US$515.8m) earned in the third quarter according to finance chief Axel Strobek.

Reuters noted this would imply full-year operating profit of more than EUR1.52bn ((US$2.27bn) versus the EUR2.77bn (US$4.14bn) it earned in 2008.

For the first nine months, Audi reported a pretax profit of EUR1.4bn (US$2.1bn). The VW Group posted nine-month earnings before tax of only EUR1.07bn (US$1.6bn), implying that its premium brand kept it in the black.