Europe's largest carmaker Volkswagen
French carmaker Renault also published a drop in third quarter sales, but the year-on-year fall was less steep than in previous quarters, and it said positive trends seen in the second quarter carried on into the third.
Value brands like Volkswagen and Mazda have generally enjoyed a better year than premium names like Daimler's
In a conference call, VW's head of group sales Detlef Wittig confirmed that the schemes were creating a slippery slope where customers were becoming used to low prices.
It will certainly be difficult to bring prices up. The best we can imagine is that we keep our prices stable, he said, in a comment that is bound to worry other major rivals as well.
Improving economic indicators and generally better-than-expected quarterly results driven by swift cost cuts have driven investor hopes for a healthy earnings rebound in 2010 that Volkswagen may be attempting to dampen, however.
The trend in the automotive industry means that there is no reason for premature optimism. The business climate remains tough, Chief Executive Martin Winterkorn said in a statement.
But Winterkorn's cautious comments were not enough to dull investor enthusiasm -- shares in Volkswagen's more heavily traded preferred shares
HSBC analyst Horst Schneider believes statements like these show VW is concerned that bullish expectations could outpace profit performance just as the carmaker plans to raise fresh equity next year to help finance the gradual acquisition of Porsche's
This is simply a case of managing expectations. Considering the capital increase planned for sometime in the first half, the worst that could happen is for expectations to rise too far too fast, Schneider said.
While Volkswagen's third-quarter operating profit of 278 million euros ($409.7 million) missed a Reuters poll by 33 percent, much of the deterioration in results came from a severe plunge in its other operating profit line, where lower currency gains and higher writedowns on receivables were booked.
Automotive net cash flow in the first nine months was very strong at 5.1 billion euros.
This wasn't a pure destocking effect that would then reverse later on. Inventories haven't really changed that much over the second quarter, so it was overall good working capital management and disciplined (investment) capex, said Commerzbank analyst Daniel Schwarz.
VW's finance chief Hans Dieter Poetsch dismissed speculation that the group should buy at least a 50.1 percent majority stake in Porsche SE's
Volkswagen plans to acquire full control before its planned merger with Porsche SE in the course of 2011, and Poetsch said he and CEO Winterkorn would take over running Porsche SE once they were finished with formulating the contracts that detail the concrete steps of the transaction.
We're confident that this task will be accomplished soon, he explained, adding later that while there were a lot of opportunities for further dealmaking during the crisis that they had their hands full with Porsche.
We believe it would not be wise to burden the company right at the moment with further corporate steps so that's why we are concentrating currently on the Porsche situation, he said.
VW owns 30 percent of MAN and many believe it is only a matter of time before it takes control of the truckmaker.
CAPITAL HIKE AT CONTI TOO
He was also impressed by the 231 million euros in profits earned at VW's two Chinese joint ventures, whose results only affect the pretax line since neither are consolidated.
In China -- one of the last bastions of auto sales growth despite the crisis -- the group's retail sales in the first nine months exceeded those in Germany for the first time.
Thanks in part to its dominant position in China, Volkswagen continues to expand its global share and has gained nearly 2 full percentage points year-to-date with 11.7 percent of the retail market.
Mazda, Japan's fifth-largest automaker in which Ford
Continental, which competes with global suppliers like Bosch
(Writing by Helen Massy-Beresford and Christiaan Hetzner; Editing by Rupert Winchester and Jon Loades-Carter)