Porsche 2010 Annual Report Download - page 108

Group management report
be especially affected if competing automakers
were to further step up their sales incentives.
Freight transportation faces the risk of
transported volumes being shifted from commercial
vehicles to other means of transport.
Volkswagen sells most of its vehicles in
western Europe. Consequently, a sustained drop in
prices and resulting fall in demand in this region
would have a particularly strong impact on the
company’s earnings. Volkswagen counters this risk
with a clear, customer-oriented and innovative
product and pricing policy. By contrast, its overall
delivery volume outside western Europe is broadly
diversified across the markets of North America,
South America, Asia-Pacific, and central and east-
ern Europe, with the Chinese market accounting for
an increasing share of the volume. The Volkswagen
group is already market leader in numerous existing
and developing markets or is working resolutely to
become market leader. In addition, strategic part-
nerships are enabling us to increase the presence
of the Volkswagen group in the relevant countries
and regions and cater to regional requirements.
The Volkswagen group continues to approve
loans for vehicle finance on the basis of the same
cautious principles applied in the past, taking into
account the regulatory requirements of Sec. 25a (1)
German Banking Act (KWG).
The economy recovered markedly overall
during the past fiscal year. However, the Volks-
wagen group’s trading and sales companies con-
tinue to feel the effects of the financial and eco-
nomic crisis, as it remains difficult to raise bank
loans to finance business operations. A group sup-
port program that granted automotive dealers and
outlets financing on attractive terms via the group’s
financial services companies during the financial
and economic crisis, thus reducing the risk of their
insolvency, was therefore very well received. In
addition, the Volkswagen group has established a
risk management system to identify in good time
and counteract liquidity bottlenecks that could
hinder smooth business operations.
The provisions of the new Block Exemption
Regulation and European legislative initiatives could
result in further liberalization and therefore increas-
ing competition, particularly in after-sales service
and the sale of genuine parts.
The European Commission is planning to end
design protection for visible vehicle parts. If this plan
is actually implemented, it could adversely affect the
Volkswagen group’s genuine parts business.
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