Pretax profits at Volkswagen tripled last year

VOLKSWAGEN, IRELAND’S largest car distributor, more than tripled pretax profits from its Irish operation last year, as a recovery in the Irish car market helped it secure a 30 per cent rise in revenues.

Volkswagen credited the Government’s scrappage scheme, which came into effect in January 2010, with its recovery, noting that the scheme reduced the impact of the economic crisis on car sales.

Accounts filed at the Companies Office for Volkswagen Group Ireland show that the company’s turnover increased to €343 million in 2010, from which it made a pretax profit of €1.3 million for the year.

This compares to a profit of €399,000 in 2009.

Volkswagen Group Ireland, a wholly-owned subsidiary of the German car giant, imports and distributes the VW, Audi, Skoda and Seat brands in Ireland. The four brands combined hold a 23.3 per cent share of the Irish car market, according to the most recent industry figures.

The group’s financial performance was buoyed by a 50 per cent climb in the car market in 2010 after a severe downturn in 2009.

The directors of the company said they had “focused on adjusting cost levels to the economic situation”, as well as its strengthening its sales networks, during 2010. New ordering systems also improved delivery times, they added.

The recovery in the market has continued into this year, with figures from the Society of the Irish Motor Industry showing that new car sales for the first nine months of this year are up almost 5 per cent on 2010, with 87,182 registrations.

However, since the scrappage scheme ended in June, there has been a drop-off in sales.

New car registrations last month are down 35 per cent on September 2010.

As well as the boost from the scrappage scheme, Europe’s largest car maker also saw its Irish operation enjoy a substantially lower cost of borrowing, with its interest bill falling from €737,000 to €361,000.

This partially offset a loss of €800,000 on a disposal.

Volkswagen employed an average of 114 people during the year, roughly the same as in 2009, but cut its wage bill from €12 million to less than €10 million. The directors of the company were paid basic salaries of €691,000, up from €647,000, the notes to the accounts state.

Industry figures for September show that Volkswagen is the second most popular brand of car in Ireland, with 12.4 per cent of the market.

This is just behind Toyota’s 13 per cent share, and ahead of Ford, which has 11.8 per cent.