Volkswagen Surpasses Ford as World’s Most Profitable Automaker

Due in part to high demand in China, Volkswagen AG has surpassed Ford Motor Company as the most profitable automaker in the industry.

On Friday, the German automaker reported that its net income grew to $9.42 billion in 2010 compared with $6.56 billion for Ford. General Motors Company and Toyota Motor Company reported yearly profits of $4.7 billion and $6 billion respectively.

Volkswagen is also forecasting higher earnings for the current year, and has reported that demand for its vehicles in China is increasing. In 2010, VW’s sales in China grew by 37 percent to 1.92 million units. The company expects that growth, combined with higher sales in Brazil, India and Russia, to help it close the gap as it strives to dethrone Toyota as the world’s largest automaker.

Last year, Volkswagen reported record sales of 7.2 million vehicles and expects to increase deliveries by five percent in 2011.

Landesbank Baden-Wuerttemberg analyst Frank Biller said, “These are very strong results. The operating business looks very solid, driven by sound demand from key markets including China.”

On January 31, Volkswagen was forced to halt production at its factories in Wolfsburg and Emden, Germany as parts makers were unable to keep up with demand. The company’s Audi luxury division has also set new sales records. On Thursday, the automaker announced that it will add an additional 2,000 workers to help it meet the growing demand for its premium vehicles.

In a statement Volkswagen said, “We expect the group’s revenue and operating profit in 2011 to be higher than the previous year. However, the continuing volatility in interest and exchange rate trends and commodities prices will weaken the positive volume effect.”

Last November, VW announced that it plans to invest 51.6 billion euros through 2015 to develop its nine brands globally, with an additional 10.6 billion euros to be invested in China. In Russia, VW plans to build more than 100,000 vehicles this year. Much of that production will be accomplished through its partnership with Russian automaker, GAZ.

BHF-Bank AG analyst Aleksej Wunrau said, “Volkswagen is extremely well positioned in lucrative growth markets. Sales took a slight hit in the fourth quarter but still performed better than the overall market.”

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