Cars No gloom for European car makers 23/07/08 20:02 CET

European car makers Volkswagen, Peugeot Citroen and Fiat are defying gloomy forecasts, coming up with better than expected results thanks to cost cuts. And despite the economic slowdown and slumping sales all three maintained their targets for this year which caused their shares to rise.

Sales in Europe were down 7.9% in June, but sales have soared in emerging markets such as Brazil, Russia, India and China. The car makers have seen better sales of smaller vehicles in response to record fuel costs.

VW’s second-quarter operating profit rose 22% to 2.1 billion euros. PSA Peugeot Citroen reported a 32% surge in net profit for the first half of the year and Fiat posted a 19.6% rise in quarterly profit to 1.1 billion euros.

Truck sales are also proving resilient. Volvo announced a bigger-than-expected second-quarter rise in pre-tax profit. It also left unchanged its forecast of 10% growth in the European truck market this year.

Meanwhile, looking to the future, major manufacturers such as GM, Toyota and Ford have been showing off vehicles powered not by petrol or diesel but by electricity at an event called the Plug-In Convention in California. The vehicles being displayed should be on the roads in about two years time.