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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

Swedish economy to grind to a halt as interest rates kick in

Sweden faces an economic slump next year that will see economic growth grind to a complete stop, Sweden's official government economics forecaster, has warned.

Swedish economy to grind to a halt as interest rates kick in

Sweden’s National Institute of Economic Research, which is tasked with tracking the business cycle for the Swedish government, warned in its quarterly forecast on Wednesday that greater than expected energy prices, interest rate rises, and stubborn inflation rates, Sweden was facing a significant downturn. 

The institute has shaved 1.6 percentage points off its forecast for growth in 2023, leaving the economy at a standstill, contracting -0.1 percent over the year. 

The institute now expects unemployment of 7.7 percent in 2023, up from a forecast of 7.5 percent given when in its last forecast in June.

“We can see that households are already starting to reign in their consumption,” said Ylva Hedén Westerdahl, the institute’s head of forecasting, saying this was happening “a little earlier than we had thought”. 

“We thought this would have happened when electricity bills went up, and interest rates went up a little more,” she continued. 

The bank expects household consumption to contract in 2023, something that she said was “quite unusual” and had not happened since Sweden’s 1990s economic crisis, apart from in the immediate aftermath of the Covid-19 pandemic. 

This was partly down to a five percent reduction in real salaries in Sweden in 2022, taking into account inflation, which the institute expects to be followed by a further two percent fall in real salaries in 2023. 

If the incoming Moderate-led government goes ahead with plans to reimburse consumers for high power prices, however, this would counterbalance the impact of inflation, leaving Swedish households’ purchasing power unchanged. 

The institute said it expected inflation to average 7.7 percent this year and 4.6 percent in 2023, both higher than it had forecast earlier.

Sweden’s Riksbank central bank this month hike its key interest rate by a full percentage point, after inflation hit 9 percent in August, the biggest single hike since the 1990s. 

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