VW heads for pounds 800m loss: Disastrous performance at Seat and restructuring costs to dominate results
The full-year loss at Seat will amount to DM1.3bn, on top of which come restructuring costs of DM600m. According to Mr Piech, the profit and losses of other marques and regions in the group should balance each other out.
Analysts estimate losses at the Audi division of around DM200m and in North American operations of around DM300m. Despite internal reports that VW's domestic operations will run operating losses of several hundred million marks in 1993, Mr Piech repeated his pledge of finishing the year with a 'black zero'.
Having pinned his reputation on maintaining a dividend for VW, Mr Piech will have to resort to hidden reserves to boost the result.
He said: 'A turnaround in the poor sales trend is not in sight. We expect no noticeable recovery from the market next year, so that sales will stagnate at their current level.'
VW revised its rolling medium-term investment programme for cars sharply downwards. Between 1994 and 1998 planned investments are to be reduced to DM35bn from DM45bn. Last year the medium-term plan was already cut by DM5bn to DM45bn.
The investment cuts will fall particularly in the next two years. 'All running investment programmes will be reassessed,' Mr Piech said.
Volkswagen provided little clarification of the complex four-day working week plan it has just concluded with the IG Metall union, which is to run for two years from 1 January.
For the first time VW confirmed the union's claim that the annual wages of its 100,000 German workers will be cut by only 10 per cent. At the same time, VW said it had reached effective savings close to the 20 per cent reduction in working hours.
Of the 30,000 workers whom VW says it no longer needs but who have been temporarily spared from lay-off by the four-day week, the company said 20,000 were in excess, not because of the recession, but because of improvements in productivity. Mr Piech refused to comment on what would happen to this 'structural overhang' in 1996, when the temporary employment guarantee ends.
Presenting the investigation by the external auditors, KPMG Deutschland, into whether VW had acquired confidential information from General Motors when Jose Ignacio Lopez de Arriortua joined the German car maker from GM, Klaus Liesen, head of VW's supervisory board, said: 'There is no reason to believe that industrial espionage in VW's favour occurred.'
At the same time, an abridged version of the KPMG report made available to the press stressed that events surrounding the destruction of GM documents by Mr Lopez and several colleagues at VW's Rotehof guesthouse 'could not be completely clarified'.
David Herman, chairman of GM's European subsidiary Opel, accused VW yesterday of concealing the facts.
'The fact that VW employs managers in key positions of the company when they have illegally removed documents from their former employer is an unprecedented case in the history of German industry,' he said.
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