Daimler, VW confident in face of slowdown

German automakers Volkswagen and Daimler shrugged off fears of a looming economic downturn Thursday, insisting strong global demand would enable them to sharply increase full-year profits. VW, Europe's biggest carmaker, boasted a threefold increase in its bottom-line earnings for the first nine months on booming worldwide demand for its vehicles. And, notwithstanding volatile interest and exchange rates and higher raw material prices, the group -- whose brands include VW, Seat, Skoda and Audi, as well as trucks Scania and MAN -- was projecting a "substantial" increase in both sales and earnings for the whole of 2011. VW, which has set itself a goal of becoming the world's biggest carmaker by 2018, said its net profit soared to 7.146 billion euros ($10 billion) in the period from July to September. That took its nine-month profit up to 13.641 billion euros or nearly three and a half times what it earned in the year-earlier period. Nine-month revenues were up 25.6 percent at 116.28 billion euros and unit sales rose by 14.1 percent to 6.17 million vehicles. VW conceded that the eurozone debt crisis and the winding down of government-sponsored vehicle buyback schemes would hit demand in western Europe. But that would be offset by continued rising car sales in other regions -- notably central and eastern Europe, China and India and the Americas. For its part, rival automaker Daimler unveiled a 16-percent drop in third-quarter profits, but said that was largely due to a writedowns on its investments in French and Russian groups Renault and Kamaz, plus start-up costs for new models. And that did not stop Daimler, which owns the flagship Mercedes-Benz brand, from lifting nine-month profits by 20 percent to 4.244 billion euros, revenues by 9.0 percent to 77.5 billion euros. Chief executive Dieter Zetsche said he was satisfied with business so far this year. "Daimler operated very successfully in the third quarter. All divisions developed as we expected," he said and looking ahead to the full year he affirmed the group's forecast for a "significant" increase in underlying earnings compared with 2010. "Despite the worsened economic situation, growth of worldwide automobile markets will continue this year, but at significantly lower rates than in 2010," with global demand for cars expected to increase by nearly five percent, he said. For the whole year, Daimler was projecting a "significant" increase in unit sales this year frm the 2010 figure of 1.9 million vehicles, Zetsche said. And Mercedes-Benz was pencilling in a new record in unit sales "in view of the continuation of generally good market prospects combined with numerous model changes and new products." Investors welcomed the positive news, with VW shares showing a gain of 8.1 percent at 127.85 euros on the Frankfurt stock exchange, and Daimler shares adding 2.9 percent to 38.99 euros.