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May 6, 2022updated 09 May 2022 10:20am

Volkswagen claims cost efficiency at heart of Q1 operating profit gain

VW brand operating operating profit before special items increased 4.6 percent to EUR 513 million in the first quarter.

By David Leggett

The Volkswagen brand strengthened the VW Group’s economic efficiency in the first quarter of 2022, the company says.

In the first three months, operating profit for the Volkswagen brand before special items increased to EUR 513 million (Q1 2021: EUR 490 million). Sales revenue came in at just under EUR 15 billion (Q1 2021: EUR 17.6 billion) due to an optimized model and price policy, while the number of deliveries in the same period came in at around one million vehicles (Q1 2021: 1.36 million) due to the war in Ukraine, the global semiconductor shortage and the most recent coronavirus measures in China. In contrast, the operating return on sales before special items rose to 3.4 percent (Q1 2021: 2.8 percent).

“We further improved our economic efficiency in a difficult environment. This underscores that Volkswagen has chosen the right path for achieving a lasting improvement in its competitiveness and profitability with the ACCELERATE strategy. We have therefore laid a very solid foundation for the accelerated transformation to zero-carbon and fully networked mobility,” says Volkswagen CEO Ralf Brandstätter.

Continued focus on cost efficiency – outlook for 2023 confirmed

Volkswagen says it is continuing to work hard on improving its cost efficiency – for example on further reducing its fixed costs and overheads – in order to strengthen its competitiveness long term. “We are currently facing different challenges such as the geopolitical uncertainty, commodity and energy price hikes and the effects of the pandemic in China. We’re working to counter these risks with our cost-cutting measures and by improving the quality of our operating result in specific areas. However, we’re sticking to our target of an operating return on sales of 6 percent in 2023,” said Volkswagen CFO Alexander Seitz. VW said the forecast is contingent on how the war in Ukraine evolves and in particular on its impact on the global economy and thus on the Volkswagen brand’s business activities. Customer demand remains high for both ICE and electric models.

Further sharp rise in unit sales of BEVs; ID.4 capacity boost

Some 53,400 all-electric vehicles (BEVs) were delivered in the first three months (+74 percent). VW said the electric ID.4 plays a key role  – with 30,300 units sales in Q1. Volkswagen said it is now “pressing ahead with the expansion of production capacity for its best-selling electric car”. On May 20, 2022, the plant in Emden will start series production of the ID.4, creating additional capacity for the model. The ID.4 will also roll off the production line in Chattanooga in the United States in the second half of the year. The models of the entire ID. family continue to enjoy buoyant demand, with over 120,000 customer orders being placed for the ID. models in Europe alone.

The backlog of orders across all drive types reached a historic high of more than 670,000 vehicles in Europe alone.

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