More profit in the electric year: vw earns well

More profit in the electric year: vw earns well

Further increase in SUV sales and in-house cost-cutting will give the VW group’s core brand a significantly higher operating profit in 2019.

Ahead of the important year 2020, with the launch of many new models, the wolfsburg-based carmaker also wants to underfund additional investments worth billions in its electric fleet. In the e-mass model ID that has just been launched.3 there is still a hitch in one important area – but the production target is there.

"In a shrinking overall market, the volkswagen brand has gained market share worldwide and substantially improved its operating result," said managing director ralf brandstatter, looking back on the year that has just come to a close. He did not yet provide any information on the exact amount of the gain. In 2018, the main division of the VW group had earned 3.239 billion euros before special influences – such as legal costs for the diesel affair – in the current business year.

Brandstatter said the chances are good that sales will also be in the black in the year to come. Volkswagen is "confident of being able to slightly top the previous year’s deliveries". 2018 there were 6 in total.245.000 cars with the VW emblem.

By 2024, the core brand of the world’s largest carmaker plans to invest 11 billion euros in the expansion of e-mobility; across the group, the figure is 33 billion euros. The vw passenger cars division estimates that it will invest 19 billion euros in "future issues" over the next five years.

A total of 34 models will be launched in 2020, including eight electric or hybrid cars and twelve suvs. The second vehicle in the all-electric ID series is expected in the fall – also an SUV: the ID next will follow the compact car ID.3, production of which commenced shortly.

"Now every third volkswagen worldwide is an SUV," said brandstatter. The often criticized vehicle type remains necessary in order to be able to finance the change to e-mobility, said VW group CEO herbert diess in the ARD program "maischberger – die woche". And an end to the internal combustion engine is only realistic in about 20 years: "to become CO2-neutral in 2050, we have to phase it out in 2040."

Volkswagen says it is making progress with the new WLTP emissions and consumption standard. Brandstatter said that the company had "got a good grip on this issue this year. In 2018, there had been considerable problems here due to delays in the changeover.

Savings from the "future pact" launched in 2016 are also a driver of profit development. 2.6 of the 3.0 billion euros in planned cost reductions achieved by the end of 2019, finance chief arno antlitz said. The reorganization is continuing with a "roadmap digital transformation" – in parallel with the elimination of thousands of jobs, new positions are being created in areas such as the development of proprietary software.

"Of the targeted 9,000 employees in futures, we have about half on board," reported antlitz. "The other half we will add in the coming months and years." Diess said, up to 20.000 jobs could be cut in the next few years.

In the ID series, VW wants to offer relatively favorable e-cars with a sufficiently rough range. With the first type ID.3 more time is needed to install new software systems. Manager-magazin" reported that thousands of copies had to be "reworked". But VW says production targets are not in jeopardy.

The group has already converted large parts of the zwickau plant for production with the modular electrical system (MEB). Many of the same parts are used in different models. The market launch of the ID.3 is unchanged for summer 2020.

During the preparation of the new golf 8, there were reportedly problems with the electronics in the beginning. VW began "with a relatively flat start-up curve" in the number of pieces. In the meantime, "the market launch in germany has started as planned."

In order to develop a significantly higher proportion of electronics and vehicle IT in-house in the future, volkswagen is setting up a new unit starting at the turn of the year. By 2025, the "car.Software" organization with group-internal experts, external hires and specialists from company acquisitions more than 10.000 employees include.

Total productivity to continue to grow by at least 5 percent per year. "In the future, we will have to compensate much more strongly for the high production costs by making progress in productivity," said antlitz, commenting on the situation at the german plants.

For the operating margin – i.E. The ratio of operating profit to sales – the previous target remains unchanged. "We can state that, from today’s perspective, we will meet our target of four to five percent for the full year," said the chief financial officer. The return on investment at the core brand has long been low compared with competitors. Increasing earning power in the long term is one of the main objectives of this.