Düsseldorf Because of the acute shortage of chips, Volkswagen remains cautious for the rest of 2021 despite the brilliant half-year results. “The prospect of the further development of the year remains limited because of the semiconductor situation,” said CFO Arno Antlitz in an interview with the Handelsblatt. The VW Group could not produce several 100,000 vehicles in the first six months due to a lack of semiconductors, has its earnings but still significantly increased. Antlitz justified this development with a higher demand for premium vehicles. “In addition, we have partly managed the scarce semiconductors according to the return on investment,” added the Board of Management. Volkswagen will continue to use this new efficiency approach in the future. “We want to maintain the discipline with the margin, after all we have very excellent products,” continues Antlitz.
Antlitz was cautious about a possible IPO of Porsche. However, he indicated that such a step is unlikely at the moment. “We want to finance the transformation from our own resources, and Porsche is playing an important role in this,” says the VW CFO.
Top jobs of the day
Find the best jobs now and be notified by email.
Read the entire interview here:
Mr. Antlitz, the VW Group has now achieved an operating return of 8.8 percent. You only expect a maximum of 7.5 percent for the entire year. Are you so cautious about the lack of chips? These are two aspects. There is a certain seasonality in our business: the third quarter is typically a bit weaker because of the summer break. However, it is also correct that we expect the semiconductor issue to have a greater negative impact in the third quarter. Nevertheless, we will try to catch up with the lost production as much as possible. That’s why we then increased our margin corridor by 0.5 percent to up to 7.5 percent. The visibility of the further development of the year remains limited due to the semiconductor situation.
They couldn’t build several hundred thousand cars because of the lack of chips. Nevertheless, the profit increases. How does it work? We did indeed have a very good result in the first half of the year. Vehicles that have not been produced are not to be equated with vehicles that have not been sold. In the first half of the year, we were able to reduce the impact with sales from the warehouse. In addition, we have done one thing well so far: We have significantly improved the margins per car. On the one hand, there was overall higher demand for higher-margin vehicles, especially in the premium segment, and we managed some of the scarce semiconductors on the basis of returns. On the other hand, we have worked successfully on costs and see good development at our financial services subsidiary. Those were decisive factors for it.
The shortage of chips has forced automakers to think about efficiency again. Will it stay that way in the long term? I can only speak for us in the Volkswagen Group. We will try to maintain this higher margin level. This also applies when the supply situation for chips has stabilized and our warehouses have filled up again. We want to keep the margin discipline, after all, we have excellent products.
Does that lead to a shift within the group’s portfolio: away from the mass brands like Skoda and VW and towards Porsche and Audi? This movement towards higher-margin cars can be seen within each individual brand, including Volkswagen Passenger Cars. Skoda and the other high-volume brands have also developed well – and this has compensated for the semiconductor effect. However, we can also see that the premium market is developing somewhat more strongly overall.
Could one of the consequences of the current development be that you will strive for less growth in pure sales figures in the future? We said a long time ago that our focus is not on volume leadership. Our focus is the quality of our business, that means earnings and, of course, first and foremost, satisfied customers. We will consistently continue on this path.
In the next few years, you might stop at ten or eleven million cars sold annually and stop growing? We want to grow with the entire market, that is clear. But as I said, the focus is on customer satisfaction and profitability.
Volkswagen also wants to transform itself into a mobility provider. These new services could also replace classic car production? Mobility solutions are an important part of our new strategy. They will be a vital part of our future business. The planned takeover of Europcar will also help us, with which we can significantly accelerate the development of this area. Our new mobility platform should of course also generate positive results.
You often speak of cost discipline. Where do you want to save? We are looking at the major transformation towards electromobility and digitization, which we must of course manage. We want to finance this change from our own resources. This also includes our cost programs: We want to reduce fixed costs by five percent by 2023; We will also reduce purchasing costs by seven percent by 2023. We have already made good progress this year. In a sense, we are financing our future with these programs.
In purchasing, you are exposed to considerable price increases in raw material costs. Are you still achieving your goals? There will always be such countermeasures. Hedging and longer-term contracts such as aluminum can reduce the impact of such price increases. However, we cannot fully compensate for the high price increases for steel and other raw materials. We are working against this as best we can with efficiency measures, but ultimately we may have to pass on some of the price increases on the raw materials side. The top priority, however, remains that we compensate for these counter-movements internally.
Fixed-cost programs always also affect staff. Would you like to cut additional jobs? We are in the middle of the transformation and have decided on HR programs for this some time ago. On the one hand it is about streamlining, but on the other hand it is also about increasing employment, especially in new business areas such as batteries and software. We will be able to achieve our goals for fixed costs with these well-known programs. Part-time early retirement plays a very important role here; the downsizing is running along the demographic curve.
“No new programs on the subject of personnel planned”
So there won’t be any new downsizing programs? One or the other measure might have to be brought forward. But there are no plans for any new HR programs.
You want to finance the restructuring of the group from the current cash flow and thus from today’s combustion engine business. Will that really be enough to raise the billions? We have a really good chance. The MQB construction kit we use for the combustion engines has been invested, so it only causes low loads. This platform also has a high degree of flexibility and a lot of product substance. This creates very competitive cars that we can sell well. This enables the necessary cash flows to be generated.
But asked again: Will these cash flows really be enough for all the new battery factories and the billions in software development? Our first half of 2021 underscores that we are making good progress with it. On the other hand, it is also clear that we do not want to finance everything ourselves in the upcoming transformation. Example cell production: We work together with partners, which reduces our own investments. We don’t want to take over Europcar alone either; partners are also involved. These examples point the way to the future: We will increasingly work with strong partners. In addition to the financial aspect, their skills, which they bring to the projects, also play an important role.
Will there be an IPO every now and then? At Argo AI, your US subsidiary for autonomous driving that is run jointly with Ford, there are corresponding considerations. Argo AI and Ford are also a good example of how to work with partners and develop new skills together.
Again and again there is speculation about an IPO of Porsche. This is the money box if Volkswagen should ever need a lot of money? We want to finance the transformation from our own resources, and Porsche is playing an important role in this. I would like to leave it that way.
Mr. Antlitz, thank you very much for the interview.
More: VW knows no crisis: car manufacturer writes record numbers and increases profit targets.