VW Group: Operating profit down by more than 80%

Coronavirus has seen profits tumble and vehicle deliveries decrease by almost a quarter at Volkswagen Group in the first quarter of 2020.

The carmaker says that the COVID-19 pandemic has had a “substantial impact” on its business in the first three months of the current fiscal year.

Deliveries to customers, it says, decreased by 23% – some 600,000 vehicles – compared to the same period of the previous year, when 2.6 million vehicles were delivered.

Sales revenue fell by €4.9 billion (£4.3bn) – more than 8% – to €55.1bn (£48bn) from January to March, while operating profit decreased significantly. It was down by 81.4% or €3.9bn (£3.4bn) to €900m (£785m).

In the first three months of the year, the Volkswagen Passenger Cars brand sold 765,000 (910,000) vehicles, a decline of 16%.

Operating profit decreased to €481m (£419m) from €921m (£804m).

Unit sales by Audi fell to 268,000 (305,000) vehicles globally in the reporting period. Operating profit fell from €1.1bn (£960m) to just €15m (£13m).

Skoda sold 237,000 vehicles in the reporting period, 13.7% fewer than in the previous year. Sales revenue amounted to €4.8 compared to €4.9 billion for the same period last year. At €307m (£268m), operating profit was €103m (£90m) lower than in the previous year.

Finally, unit sales by Seat stood at 140,000 vehicles in the first three months of 2020. This was 20.6% lower than a year earlier.

Sales revenue fell short of the prior-year figure by 16.2% at €2.6bn (£2.2bn).

Volkswagen Group board member Frank Witter said: “The global COVID-19 pandemic substantially impacted our business in the first quarter.

“We’ve taken numerous countermeasures to cut costs and ensure liquidity and we continue to be robustly positioned financially.

“The gradual restart, also of our factories outside of China, has begun. The health of our employees and suppliers remains the clear priority here.

“In Germany, the dealers have reopened since last week. We have thus taken initial steps together to get the business up and running again. The Volkswagen Group is steering through this unprecedented crisis with focus and determination.”

The Volkswagen Group expects deliveries to customers in 2020 to be significantly below the prior year due to the impact of the COVID-19 pandemic.

Challenges, it says, will also arise particularly from the increasing intensity of competition, volatile commodity and foreign exchange markets and more stringent emissions-related requirements.

It is predicting that sales revenue of the Volkswagen Group in 2020 will be “significantly below” the prior year’s level.

Overall, it also expects operating profit for 2020 to be “severely below” the prior year, but still to remain positive.