VW heading for a profit speed bump?

September 20, 2013: 4:35 PM ET

Reports that the automaker's executives are worried that profit is falling behind projections have sent VW stock downward.

By Doron Levin

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FORTUNE -- Has Volkswagen hit a pothole on the road to world domination?

The question is front and center in Germany, after an authoritative German business magazine reported that the automaker's executives are worried that profit is falling behind projections.

VW shares fell 4% for the five trading days ending Friday, while the main German stock index was up 4%. The divergence suggests that investors have been spooked by the story, which VW quickly denied.

Manager Magazin reported that Hans Dieter Potsch, the company's chief financial officer, told executives that the VW group was on a path to miss its 2015 profit target and, therefore, might not reach its 8% target for earnings before interest and taxes in 2018.

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"We believe VW does have an issue," said Bernstein Research in an analyst report, having "overpromised on savings related to the MQB program and has created market expectations that will be difficult to fulfill." MQB is the moniker for a modular vehicle architecture, the basis for the new VW Golf and many other models from Audi, Seat, Skoda, and other VW brands.

By the end of the decade, Bernstein expects VW to be building 5.5 million vehicles worldwide from a single platform, compared with 3 million vehicles today from the platform MQB will replace.

Since 2009, VW executives have claimed that MQB will allow the automaker to realize cost savings of 20%. Bernstein has called the platform "over-hyped" and cautioned against expecting too much cost improvements from the new platform over its predecessor. Bernstein said a specialist that has torn down the new Golf to its constituent parts said the platform looks relatively high-cost, using expensive materials and engineering solutions.

The automaker has assembled a collection of 12 brands and built an impressive presence in the fast-growing Chinese market, leading to its goal of becoming the No. 1 automaker worldwide by 2018, or even before. General Motors (GM) and Toyota (TM) haven't issued specific projections, but they both harbor ambitions of their own to lead the market in terms of profits and customer satisfaction, if not in unit sales volume.

VW is expanding its customer base in North America, driven by the construction of an assembly plant in Chattanooga, Tenn. where it builds a Passat midsize sedan that's designed specifically for North American drivers. But VW could face labor unrest in the U.S. since the U.A.W. has targeted its plant for organization.

Bernstein said that VW is "pretty good" at achieving efficiencies and may have reaped most of them already. Besides, other automakers like Honda (HMC) and Hyundai have proven they also can achieve strong volume from few platforms.

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Not every one is worried about VW. Deutsche Bank issued a report based on the magazine story saying that VW ran into cost and profit trouble a decade ago and that the automaker's leaders are making sure it doesn't happen again; thus, the meeting to warn its executives and caution about costs.

What VW no doubt realizes is that speaking openly about world domination, whatever its value for motivating employees, creates lots of scrutiny from skeptics and commentators, much of it unflattering.

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