Corona consequences, delivery problems and the energy crisis also continue to cause problems for Volkswagen. Nevertheless, the group can significantly increase profits in the first half of the year. While sales of electric cars are booming, the software subsidiary remains a problem child.
The Volkswagen Group was able to jump in profits in the first half of the year despite the delivery problems with microchips and corona restrictions in China. Earnings after taxes rose by a little more than a quarter to 10.6 billion euros compared to the same period last year, as the Wolfsburg-based company announced. The second quarter, in which lockdowns slowed production and sales in the most important market in Asia, weighed on the business itself with a 22 percent drop in earnings. However, sales of electric cars picked up. The ID series is now also being manufactured in Hanover, in Emden and in the US plant in Chattanooga.
Chief Financial Officer Arno Antlitz said Europe’s largest car group had “demonstrated considerable financial resilience” despite “unprecedented global challenges”. For the second half of the year, he expects the supply chain problems to ease. In China, a noticeable recovery had already set in towards the end of the second quarter. “However, it is still not possible to conclusively assess the specific effects of the developments in the war in Ukraine or the Covid-19 pandemic (…) in the 2022 financial year,” said Volkswagen, restricting its outlook.
At the beginning of the year, it was primarily the particularly profitable luxury-class brands that carried the Group through the ailing global auto market. Audi’s operating result improved in the first half of the year from around 3.3 billion to 5 billion euros, and at Porsche from 2.7 billion to 3.3 billion euros. Almost 1.9 billion euros remained for the core brand VW passenger cars, after 1.2 billion euros a year ago. Group sales climbed 2 percent to EUR 132.3 billion. The first-time inclusion of the US truck manufacturer Navistar, which VW took over in 2021, also played a role.
Across all brands and regions, deliveries fell by more than 22 percent to around 3.88 million vehicles. Production did not decline to the same extent – some of the cars are still backing up in the factories due to difficulties in purchasing and selling parts. The group wants to put the profits into the conversion to more e-mobility, its own software and services. Other electric models are to follow, and after the start of construction of the battery cell factory in Salzgitter at the beginning of July, VW is pushing ahead with planning for the next cell factories.
The buyback of Europcar is also to be used to expand the network of mobility services from shuttle services and car sharing to subscription and rental offers. In the end, there was a problem with the development of self-programmed IT systems for future cars. Coordination problems cost a lot of money, delayed planned model launches and are said to have led to the replacement of CEO Herbert Diess on September 1st. In the second quarter, the responsible group division Cariad made significant progress with software updates for the existing vehicle fleet, it said. However, the loss in ongoing business almost doubled from 502 million to 978 million euros.
According to VW, the supply of wiring harnesses, which has been faltering in the meantime, has been “successfully managed and is largely back to a normal level”. Many manufacturers came under pressure from the end of February after the start of the war in Ukraine because suppliers in the west of the country had to temporarily stop production – with the corresponding idleness for customers in the automotive industry.
Volkswagen continues to be concerned about the rise in energy prices. The operating result adjusted for special costs for the diesel affair fell in the second quarter by 28 percent to 4.74 billion euros. Special valuation effects weighed heavily, especially for commodity hedging. Companies enter into such transactions in order to cushion further price fluctuations or volume slumps for important resources. From April to June alone, they cost VW 2.4 billion after they had pimped up the operating result in the first quarter. The number of employees fell by 0.7 percent to 668,000 by the end of June.
