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Business

German Automakers Largely on a Roll in the U.S.

German carmakers registered highs and lows amidst the sleek chrome and lights at the Detroit auto show: While Porsche made tidy profits in the U.S. last year, Volkswagen had a rough ride.

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Making a splash in Detroit -- the new Audi A8 luxury saloon.

Many German luxury carmakers were in a buoyant mood at the North America International Auto Show in Detroit, which opened its doors on Sunday.

The premier event of its kind, the Detroit car show may be all about unveiling and flaunting the latest in chrome and gleaming metal on four wheels, but there’s no denying that it’s also the definitive event for the auto industry’s top brass to take stock of business in one of their most crucial markets.

Porsche comes out tops

Business hasn’t been bad at all for German car companies in 2003, who export over 20 percent of their cars to the United States.

The clear winner has been sport car maker Porsche. Peter Schwarzenbauer, head of the company's North American business operations, told reporters that its Cayenne sports utility vehicle (SUV) had helped increase sales in the region by a third last calendar year, boosting its turnover in 2003 by 33 percent.

Autoshow Detroit Porshe Carrera GT

The Porsche Carrera GT, foreground, and the Cayenne sports-utility vehicle.

"I believe that with the Cayenne we have the possibility to significantly widen our market," Schwarzenbauer said, adding that the SUV could help shore up market share in states other than southern California, Florida and the East Coast, the traditional markets for luxury cars. "We will sell around 35,000 cars (in North America) by the end of the business year," Schwarzenbauer said.

Porsche, which posted its ninth straight record year of profit last year, aims to sell 70,000 vehicles globally this business year. Porsche executive Hans Riedel told Reuters news agency that on average, the U.S. accounts for around 50 percent of Porsche’s sales.

Audi and BMW on course

While it may not have been such a heady year for Audi, the German carmaker nevertheless registered a stable upward trend.

The Volkswagen subsidiary, which used the Detroit show to roll out its new signature 12-cylinder A8 luxury saloon on Sunday, said it sold 87,000 core Audi brand cars in the U.S. last year.

Ralf Weiler, Audi's vice president for sales, said the U.S. remained the second-most important market for the company, after China. "We had a better sales result in 2003 than in the year before by 1 percent and so we can be satisfied with the result." Meanwhile Audi’s worldwide sales reached 767,000 vehicles in 2003, an increase of 3.4 percent from a year earlier.

BMW North America chief Tom Perves admitted that the past year had been a tough one for the Munich-based luxury carmaker, but said the company had sold over 1.1 million cars last year, a 4.3 percent rise from 2002. In the U.S., the carmaker also sold 8 percent more vehicles in 2003 despite a five percent fall in December.

BMW saw its profits fall sharply in the first half of 2003 as development costs for a raft of new models shot up, but earnings rose again in the third quarter, boosted by strong demand for its new 5-series model. Perves pointed to the huge success of its family-friendly Minivan series in the U.S. and said the company had profited hugely with the introduction of new models.

Volkswagen records losses in the U.S.

In sharp contrast to the upbeat mood among most German carmakers, Volkswagen however had bad news to deliver.

Autoshow Detroit Volkswagen Concept R

The Volkswagen Concept R is shown at the North American International Auto Show.

Hans Dieter Pötsch, finance chief of Europe’s largest carmaker, said Volkwagen will lose money in its U.S. business after profit dipped in 2003. "In the auto business (in the U.S.) alone, that is excluding financial services, we will be slightly negative in 2003," Hans-Dieter Pötsch told reporters, adding he predicted a similar result for this year.

Volkswagen has suffered from an overall decline in demand, the resurgent strength of the euro against the dollar and the cutting of jobs in Brazil last year.

VW Chief Executive Bernd Pischetsrieder however said he expected the depressed German car market to look up in 2004. "I am optimistic that after so many years of decline in Europe, a positive development in Germany at least will set in 2004," he said.

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