Volkswagen has lowered its sales forecast as demand weakens in China. As Ciara Lee reports PSA Peugeot Citroen faces similar challenges although a recovery in Europe helped it post postive income for the first time in four years.
Volkswagen was already riding high after overtaking Toyota as the world's largest carmaker by first half sales - and achieving it three years ahead of target. So posting a higher quarterly profit of 3.49 billion euros was a bonus, especially after the ousting of patriarch Ferdinand Piech in April and no chairman to replace him. Cost cuts helped although China - where the group's largest division delivers 40 percent of its vehicles - is a problem. Mike Ingram is from BGC Partners. (SOUNDBITE) (English) MIKE INGRAM, MARKET STRATEGIST, BGC PARTNERS, SAYING: "The easy pickings have been made and probably going forward they need to see a pick up in top line growth. In Europe it's looking rather more positive. Elsewhere particularly in emerging markets not so good." Last year VW delivered record sales of 10.1 billion. They're expected to be flat this year now instead of moderately increasing. But VW stuck to its outlook for profit at around 6 percent and said revenue could rise as much as 4 percent, partly due to a weaker euro. Across the border PSA Peugeot Citroen is also feeling the benefit of that. The French auto maker posted positive first-half net income for the first time in four years, meeting most of their recovery goals. (SOUNDBITE) (English) MIKE INGRAM, MARKET STRATEGIST, BGC PARTNERS, SAYING: "They've certainly turned around the business since the French/Chinese bailout quite well. The CEO has certainly done a good job there. However in unveiling results ahead of expectations today they have indicated that challenges remain." Once again they include slow growth in emerging markets - China in particular.