Volkswagen Group confirms positive financial outlook for 2020

The Volkswagen Group claims its transformation towards becoming “a leading provider of electric, digital mobility” has been accelerated, rather than held back, by the coronavirus pandemic. 

The comments by CEO Herbert Diess come despite a substantial hit to deliveries worldwide, down by more than a fifth during the first eight months of the financial year. 

A total of 5.6 million vehicles were delivered before the end of August, compared with 7.1 million during the same period in 2019. Western Europe was the worst-hit region with a 30.9% drop in deliveries to customers, with China (the group’s biggest market) recording the smallest regional decrease, down 11.5%.

Despite the drop in volume, the group managed to boost its global market share, up 0.4% to 13%. In Western Europe, it grew 0.8% to 23.7%, reflecting the impact of the pandemic on the wider market. Net liquidity was still 18.7 billion euros (Rs 154,592 crore) in the second quarter of 2020 - a strong result compared with rival manufacturer groups. A reduction in inventory (cars in stock) owing to production pauses is said to be a crucial factor. 

Volume brands, such as Volkswagen, Skoda and Seat, saw the biggest hit, with deliveries down nearly 23% overall. Premium brands (Audi and Lamborghini) were down 16.2%, with sports and luxury brands such as Bentley, Porsche and Bugatti down 5.6%. The group expects deliveries in September to actually be up year on year, with Seat/Cupra and Skoda in particular heading towards a positive year-end outlook. 

Volkswagen has had more than 30,000 orders (not just reservations) for the ID 3 electric car since orders opened earlier this year, Diess claimed. Ambitions for the recently launched ID 4 include annual sales of up to 500,000 units by 2025. 

Diess estimated that Porsche is on track to have 50% of the cars it sells electrified by 2025 “at the latest”. Its operating return throughout 2020 has been a healthy 10%, with the future aim of raising that to 15%. 

Audi is claimed to have the “global market leader” in electric SUVs in the form of the E-tron. Production of the E-tron GT starts at the end of 2020, with the Q4 E-tron and Q4 E-tron Sportback due in 2021. The brand’s Artemis division, developing the next generation of electric Audis, will be the first to use the new Volkswagen Group operating system dubbed VW OS.

Regarding the pandemic, Diess said the rate of infection within its 670,000 employees is at 0.11%, one-third of the rate of the German population. The company has its own test centre in Wolfsburg where it is performing 2400 tests for the virus per day. 

Diess did not touch on continuing rumours that the Cupra brand could take strategic priority over its Seat parent, instead highlighting that the former will be one of the VW Group’s core brands in terms of volume growth and profit. He also steered clear of reports that the group will sell Bugatti to Rimac before the end of the year. 

The firm also brushed aside accusations of market manipulation related to the Dieselgate emissions scandal. Proceedings at the Brunswick regional court in Germany against Diess and current board chairman Hans Dieter Pötsch have been terminated. Proceedings are now focused on former CEO Martin Winterkorn. 

Pötsch claimed the proceedings against Winterkorn “do not concern Volkswagen AG” as its role was settled by a fine in 2018. Referencing wider regional lawsuits and investigations, primarily in the US, Pötsch claimed the company is “not trying to prevent further investigations; however, we are obliged to protect the interests of Volkswagen AG and its shareholders”. It is cooperating with relevant authorities “to the greatest possible extent”.