Volkswagen said today its profits would probably more than halve this year after weak demand, a strong and the cost of cutting jobs in Brazil hammered its third-quarter earnings.
Europe's biggest car maker earned more in the third quarter from its financial services business than it did from selling cars, with group operating profit falling 57 per cent to €510 million, below market consensus.
It also warned that its full-year results would be hit by a higher than anticipated revaluation of fixed investments and development costs. VW has been launching a new model variant somewhere in the world once every three weeks this year.
"The negative impact of the strong €, declining sales figures in important markets and upfront expenditures for new models, as well as the restructuring in Brazil, depressed the operating profit in the first nine months," the company said.
Suffering along with rivals as car demand stagnates in a weak economic environment, VW has been hit this year by the high cost of new model launches, including its key Golf V hatchback, Audi A3 and Transporter van.
VW confirmed it had taken provisions of €120 million for overhauling its business in Brazil, where it is slashing nearly 4,000 jobs amid chronic overcapacity in the worst car market the country has seen for a decade.
The German giant recently lost its title as the number one car seller in Brazil to General Motors Corp., but is hoping to recover the top spot with its new "Fox" compact car, launched earlier this month.