Volkswagen (OTCMKTS:VLKAY) lowered its sales forecast, which expected sales to be flat on last years 10.1 million cars, after weaker demand in China.
This comes after China recorded a 3.4% monthly year-on-year drop in new-car sales in June, its first decline in more than two years. China’s Automakers Association also cut its 2015 forecast for vehicle sales growth to a meager 3 percent last week, as a volatile stock market affected sales to consumers concerned about the slowing economy.
Fluctuations in China’s market will strongly affect VW, where the group’s largest division delivers more than 40 percent of its vehicles.
However, a higher-margin western European market and cost cuts helped VW raise group operating profit to 3.49 billion euros, which does not include earnings from Chinese joint ventures.
“The difficult market environment and fierce competition” is posing challenges, Finance chief Hans Dieter Poetsch said.
VW are currently trading down 2.43% at 40.97 pence per share.