So the shine has finally come off for the big German carmakers. For a minute there, we thought that they were somehow immune to eurozone wilderness. But alas, Volkswagen has announced a 26% fall in profits for the first quarter (down to €2.34bn) and Daimler had to announce a profit warning.
It’s not as bad as it sounds though: VW’s full-year outlook remains broadly in line with expectations, and at the time of writing the share price had only dipped by a couple of basis points. Equally, even though Daimler's revenue fell 3% to €26.1bn for the period, it had issued a flat earnings forecast back in February, so shareholders were not too shocked when the results were published today.
Still, giving his sixpence worth on the disappointing drop, VW boss Martin Winterkorn said: ‘As expected, business in the first quarter was dominated by the difficult economic environment. The markets were sluggish, especially in Europe, and not least in Germany. But we remain confident overall that we can pick up speed over the rest of the year.’
Unfortunately for Winterkorn, no-one else is that confident that the fortunes of the eurozone are about to enjoy some dramatic improvement. The difficulty for bosses at both companies is that the German auto industry seemed to be dramatically bucking the sales trend given the parlous state of car sales elsewhere in the eurozone. A lot of their sales were coming from China and other emerging economies, but now that the explosive growth economies have lost a bit of steam, there isn’t much hope of reviving such good figures.
Anyway, it’s only the first quarter, and there’s another year ahead – who knows, we may actually get some economic traction in the months to come. *prays*.