After the excellent results of 2019, Herbert Diess, CEO of the world’s first car manufacturer, does not hide that 2020 will be a “very difficult” year precisely because of the pandemic, which does not show signs of slowing down. The impact on the group remains “unpredictable”
by Alberto Annicchiarico
3 ‘of reading
Coronavirus also affects the world’s largest car maker hard. As leaked yesterday, this morning Volkswagen, whose stock has lost 36% since the beginning of the year and which saw sales drop by 15% in the first two months of the year, announced that it will close most of its European factories for “two or three weeks” . The CEO of the group, Herbert Diess, said that he explained that “given the current deterioration of the situation on the sales side and the increased uncertainty regarding the supply of components to our plants”, no other choice remained. Diess added that “everything possible will be done to reduce the impact of the virus.” In Frankfurt, the Vw stock recovered 2.5%, in line with the Frankfurt index, the Dax 30.
The German car manufacturer – which includes Audi, Bentley, Bugatti, Ducati, Lamborghini, Porsche, Seat and Skoda among its brands – does not therefore hide that 2020 will be a year marked by the pandemic, which does not show signs of slowing down. The impact on the group remains “unpredictable”.
On a financial level, Diess admitted, the consequences cannot be calculated and everything will depend on the duration of the crisis. The number one of the house of Wolfsburg spoke of “challenges on unknown terrains both from an operational and financial point of view”. Before the coronavirus, the German manufacturer had predicted that the group’s performance would be up to 2019, keeping the operating margin targets between 6.5 and 7.5%. 2020, however, promises to be a very complicated, if not dramatic, year. Just think that a fundamental market for Volkswagen like the Chinese one (sales exceed 4 million units of almost 11 million globally) fell by 74% in February.
“The extent and duration of the impact of Covid-19 on the Volkswagen Group are uncertain,” said CEO Frank Witter during the annual conference. “A credible prognosis is currently almost impossible.” However, in Wolfsburg they continue to believe that the plans of the electrification process, especially on the timing front for the entire 2020, must not be changed and therefore there will be no delays. Provided, of course, that the emergency does not extend beyond the foreseeable.
2019 seems so far away, the year in which Volkswagen achieved record results and exceeded expectations, with a profit growing by 15% to 14 billion euros. Revenues rose to 252.6 billion euros, 7.1% more than in 2018. Operating profit rose 22% to 16.9 billion thanks to the sales of models that guarantee higher margins, in spite of a market struggling with a transformation towards electricity that has put rivals in difficulty.