VW and Daimler Deliver the Deutschmarks

31 July 2006

Alright, so it should read 'euros'. But WAMN's alliteration addicted headline-writer needs his fix on a Monday morning!

Defying the loss-making trend among Western carmakers, Germany's DaimlerChrysler and Volkswagen both reported profitable second quarters - although the former is not bullish about Q3 prospects in the light of the current situation at its stateside Chrysler unit.

DaimlerChrysler's net income in the three months to June 30 more than doubled, thanks to a revival of fortunes at its Mercedes division.

But Chrysler's vehicle sales stateside fell 6% despite strong sales to rental companies and other fleets. But these were insufficient to offset a 9% drop in sales to individual buyers.

In the current quarter the unit is expected to post a loss of up to €500 million ($637.4m; £341.9m) due to reduced production, declining sales and the cost of launching several new models. However, Chrysler should return to profitability in the fourth quarter, when it will have several new models in the market.

Volkswagen, meantime, said it expects improvement in this year's operating profit before special items, driven by higher sales in Western Europe and the US.

Q2 net profit rose by 258% from €333m to €859m, thanks to a one-off gain of €796m from the sale of its Europcar rental unit earlier this year. Revenue rose 8% to €26.56 billion as the VW brand regained its lost popularity worldwide.

Data sourced from Wall Street Journal Online; additional content by WARC staff