VW, BMW whipsawed by strong euro, competition

[ Reuters] Both Volkswagen and BMW today reported disappointing third-quarter earnings, and cautioned that they saw no signs of improvement in the coming months. Facing heavy price competition in key markets, notably China and the U.S., continuing high costs of materials, and high fuel prices, VW is trying to boost profits by aggressive cost-cutting. The company is cutting thousands of jobs in Germany, where labor costs are high. BMW, now the world’s biggest premium carmaker, is also on a cost-cutting drive, targeting a five percent productivity increase in 2006. Nonetheless, the company sees continued lower margins going forward. Both companies are also suffering from the strength of the euro relative to the dollar.

By s.waterman@p1data.com
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[
Reuters] Both Volkswagen and BMW today reported disappointing third-quarter earnings, and cautioned that they saw
no signs of improvement in the coming months.

Facing heavy price competition in key markets, notably China and the U.S., continuing high costs of materials, and
high fuel prices, VW is trying to boost profits by aggressive cost-cutting. The company is cutting thousands of jobs in
Germany, where labor costs are high.

BMW, now the world’s biggest premium carmaker, is also on a cost-cutting drive, targeting a five percent productivity
increase in 2006. Nonetheless, the company sees continued lower margins going forward.

Both companies are also suffering from the strength of the euro relative to the dollar.