Volkswagen Earnings Defy Industry Gloom

Despite auto industry pessimism, European small-car makers have reported solid earnings. But VW's future may depend on the resilience of emerging markets

Volkswagen (VOWG.DE) on July 23 provided more confirmation that emerging markets are propping up the European car industry. The German automaker registered sales decreases in Western Europe and North America but racked up solid gains in Latin America and Asia, helping to deliver a 22% increase in second-quarter operating profit, to $3.35 billion. VW joined France's PSA Peugeot Citroën (PEUP.PA) and Italy's Fiat (FIA.MI) in reporting earnings that defied pessimism about the global auto industry. Shares of all three companies surged as investors demonstrated a newfound interest in makers of smaller, fuel-efficient vehicles.

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