@VW Group: Volkswagen brand recovers from Covid-19 slump in third quarter and confirms outlook

After the pandemic-related slump in the first half of the year, business performance at the Volkswagen Passenger Cars brand recovered noticeably in the period from July to September. With 1.5 million vehicles delivered worldwide, the core brand of the Volkswagen Group delivered almost as many vehicles to customers in the third quarter of 2020 as in the prior-year period (– 2.7 percent). In the period from January to September, however, deliveries still decreased by 18.6 percent. The gradual recovery is also reflected in the brand’s financial key performance indicators: Sales revenue amounted to EUR 47.2 billion after nine months, down 27.9 percent on the previous year. After the first six months of the year, a 35.3 percent drop had been recorded. With an operating result before special items of EUR 522 million, the brand was back in positive territory in the third quarter. The nine-month operating result before special items improved accordingly to EUR –1.0 billion (first six months: EUR –1.5 billion).

Alexander Seitz, CFO of the Volkswagen brand: “Despite the ongoing challenges from the Covid-19 pandemic, the brand returned to profitability in the third quarter. This is above all due to the systematic measures taken to cut costs and secure liquidity and the dedicated efforts of our employees, who gave their all to catch up on the backlog following the temporary shutdown in spring. Thanks to our strong product substance, we are gaining market share in many regions. In the final quarter, we are doing everything in our power to get the brand’s full-year operating result into positive territory.”

Gradual recovery of business continues

The gradual recovery in delivery figures after the significant falls at the beginning of the year continued in the course of the third quarter. While the Volkswagen Passenger Cars brand recorded single-digit percentage declines in July and August compared with the prior-year months, in September the brand was already almost at the previous year’s level, at –0.7 percent. The drivers of the gradual improvement in sales are in particular the new compact electric vehicle, the ID.3, of which around 20,000 units have already been delivered, as well as the brand’s plug-in hybrids, which are in high demand, and the significant pick-up in demand for the Golf 8.

Continuation of effective countermeasures

Despite signs of a recovery, the further development of the Covid-19 pandemic remains difficult to forecast. The brand will therefore continue the strict cost managementmeasures it has initiated. In this way, it successfully reduced fixed costs in the first nine months compared with the prior-year period. For 2020 as a whole, the brand still anticipates deliveries and sales revenue to be significantly below the prior-year level. The operating result before special items is expected to be severely lower than in 2019, but still positive.

Electric mobility offensive continues in fourth quarter

Following the market introduction of the all-electric ID.3 in September, the Volkswagen brand will continue to roll out its successfully launched e-offensive in the fourth quarter. Customers can already place orders for the ID.4, the second model to be based on the Modular Electric Drive Matrix (MEB). Being an all-electric SUV, the ID.4 has been designed as a world car, which is to be built and sold in all key regions of the world – Europe, North America, China. In addition, the brand is driving the electrification of its portfolio by launching a significant number of plug-in hybrids: PHEV versions of the new Golf and the Touareg can already be ordered. Electrified derivatives of the new Tiguan as well as the new Arteon and Arteon Shooting Brake will follow shortly. In addition, PHEV versions of the Passat and Passat Variant have also been available for a while now.

Key figures for the Volkswagen brand:

* before special items