Volkswagen is expected to sell the unprofitable luxury brand Bugatti to the Croatian sports car specialist Rimac. This was announced by CEO Herbert Diess (62) on Tuesday at the presentation of the balance sheet for 2020. The manager magazin had already in September last year about the imminent decision reported. The most likely solution for Bugatti is that the brand will first be handed over to the subsidiary Porsche, which in turn will then set up a joint venture with Rimac, according to Diess. Porsche should only receive a minority share in the joint venture. Just a few days ago, Porsche had invested 70 million euros and increased its stake in Rimac from 15 to 24 percent expanded.
Diess also announced that the group should find its way back to its old profitability in the coming years, among other things with the expansion of the platform strategy. Volkswagen is striving to further improve profitability and is pursuing the goal of returning to the target corridor of 7 to 8 percent for the operating return on sales as quickly as possible, explained Diess. Last year the return before interest and taxes was based on sales because of the Corona crisis dropped from 7.6 percent to 4.8 percent. This year management is aiming for 5.0 to 6.5 percent, if possible at the upper end of the range.
For the first time since 2015, VW shares have risen above 200 euros
The strategy of using the same platforms and components, which the group initially uses for cars with combustion engines and then Electric cars is now to be expanded to software and battery technology. This should make better use of the economies of scale of the world’s second largest car manufacturer after Toyota and further cost savings between the brands. At the same time, VW wants to accelerate the transition to a mobility service provider that also offers self-driving vehicles.
“The good performance in the crisis year 2020 gives us tailwind for accelerating our transformation,” Diess continued. This year the group also plans to deliver a million electrified vehicles. Last year, the group reported more than tripling to just under 232,000 units for all-electric vehicles, and an increase of 175 percent to over 190,000 units for plug-in hybrids. However, VW continues to reject a fixed date for the end of the combustion engine and justified this with regionally different types of electricity generation and regulatory framework conditions.
VW’s preferred shares climbed above 200 euros for the first time since 2015 on Tuesday. Most recently, they were quoted just under 5 percent higher at 205 euros.
The CEO’s earnings have hardly fallen
Despite the slump in profits last year, CEO Diess’ remuneration has hardly fallen. The 62-year-old will receive total remuneration of 7.7 million euros for 2020, almost 700,000 euros less than in the previous year, as the annual report also showed. The operating profit of the group was as already known last year because of the Corona crisis shrunk by 43 percent to 9.7 billion euros.
The annual bonus for Diess, which is based on the operating result and the return, was halved to around two million euros. At the same time, Diess earned 1.8 million euros in variable remuneration, which was received for the first time from the change in the remuneration system. That is three times more than Diess received in 2019 in back payments from deferred bonus payments. This dampened the decline in remuneration in 2020.
In the remuneration system that was revised in 2017, Volkswagen uses the share price and earnings per share for the past three years as the basis for the long-term bonus (LTI). The total remuneration, the inflow, also includes pension benefits of almost 1.6 million euros.
The group already had further plans yesterday presented. A separate network of battery cell factories is to be set up, which will make e-cars cheaper and secure the internal supply of important components. To this end, the ongoing expansion of the Salzgitter plant is being increased, with five more cell plants to follow by 2030.