Volkswagen lowers sales forecast amid slowdown

Volkswagen Chief Executive Martin Winterkorn speaks at the annual news conference of Volkswagen in Berlin March 12, 2015.[Photo/Agencies]

Volkswagen AG has lowered its global sales forecast amid a slowdown in China and challenging markets in Russia and South America.

Deliveries will be about at the level of last year, the Wolfsburg, Germany-based carmaker said on Wednesday in a statement. It had previously forecast a moderate increase in vehicle sales this year.

The market woes come at a delicate time for the world's second-biggest auto manufacturer, which was shaken earlier this year by a power struggle that led to Chairman Ferdinand Piech's sudden resignation. The company is trying to boost profit before 2018 at its biggest unit, the namesake VW brand, and Chief Executive Officer Martin Winterkorn has said he'll slim the group's management structure.

"We are keeping a very close watch on global macroeconomic trends, especially where there are uncertainties such as in the Chinese, Brazilian and Russian markets," Winterkorn said in the Wednesday statement.

Even with tougher markets, operating profit in the second quarter increased 4.9 percent to 3.49 billion euros ($3.85 billion) from 3.33 billion euros a year earlier. The figure beat the 3.48 billion-euro average of 10 analyst estimates compiled by Bloomberg.

VW's luxury brands remained the group's key earnings contributors in the first half of the year. Audi's operating profit rose 7.4 percent to 2.9 billion euros, and Porsche's profit jumped 21 percent to 1.7 billion euros, driven by the new Macan compact sport utility vehicle. The two brands accounted for more than two-thirds of VW's earnings in the first six months of the year.

The namesake brand improved its first-half profit margin to 2.7 percent of sales from 2.1 percent, helped by positive effects from the unit's efficiency program. Still, that remains a far cry from a target of more than 6 percent of sales by 2018.

VW's rigid structure has made it slow to adapt to trends such as the advent of SUVs. Winterkorn has said he'll present his plan for more efficient management by the end of September.