Volkswagen Group operational profits for the first half of 2012 were up more than 10% from the same period the previous year, despite challenges facing the whole automotive industry. The climate and competitiveness are anticipated to heat up in 2H22 and 2023, but the team is ready for the challenges, according to CFO Arno Antlitz.
On July 28, Volkswagen announced its 1H22 financial report. With the initial consolidation of Navistar International, a US-based truck manufacturer, the group generated sales revenue of EUR 132.3 billion (US$134.8 billion). From 1H21, the income climbed by 2%.
Operating profit before exceptional items for the group climbed 16.1% to EUR 13.2 billion, with a margin of 10.4% for the passenger car segment.
Volkswagen’s worldwide BEV deliveries increased by 27% to 217,000 vehicles in the first half of this year, with order intakes in Western Europe rising by 40%. However, as a result of lockdowns brought on by COVID in China and supply chain issues, overall deliveries in 1H22 fell by 22%.
Currently, 6 percent of the group’s total deliveries are BEVs. Volkswagen reportedly plans to increase the percentage to 7-8% in the second half of 22. It is increasing manufacturing in Chattanooga, Tennessee, Emden, Hanover, Germany, and other locations to meet the objective. Antlitz stated during a conference call that the three locations’ capability would be realized in the third and fourth quarters of this year.
The CFO added that supply chains are currently being disrupted by three significant problems. First, albeit the situation is under control, the ongoing conflict in Ukraine has had an influence on the local wiring harness supply. Two shifts are being worked by suppliers. Production has occasionally been moved to North America or other nations in Eastern Europe.
Antlitz stated that Volkswagen anticipates the chip shortages to alleviate in 2H22 but persist through 2023. As a result, the industry’s competitiveness is anticipated to heat up. The corporation is expanding operations in China as it gets ready for a more challenging climate, particularly in Europe and the US.
China, the second-largest BEV market for the business, accounted for 29% of BEV sales, according to Volkswagen’s 1H22 report. In 1H22, deliveries tripled to 63,500 automobiles.
Although COVID-caused lockdowns hindered output in China in the second quarter, Antlitz claimed that things had changed for the better in the area and that there are no plans for more severe restrictions.
Customers of the Volkswagen Group are still required to wait a while for their vehicles due to high demand and supply problems. Antlitz predicts that it could take Audi up to a year to complete an order. Additionally, some Volkswagen BEVs require lengthier wait times.
The organization intends to equal its inventory level from the start of this year by the end of 2023, according to the CFO. Achieving the company’s free cash flow and working capital goals would be difficult but crucial.
Volkswagen also has to contend with the rising cost of raw materials. The group had a strong first half of the year, according to Antlitz, which would make up for raw material pricing and competitiveness in the second part of the year. He continued by saying that the organization has demonstrated fixed cost and Capex discipline and is well-prepared for the challenges, anticipating volume growth in 2023.
Volkswagen started construction on its first in-house battery cell production in Salzgitter, Germany, at the beginning of July. In 2025, the production will start. When asked what the firm has done to obtain cells before the arrival of batteries built on their own, Antlitz responded that it had agreements with partners in China, Europe, and the US to increase the supply of batteries by 20 percent by 2025.
Volkswagen’s 2022 projection calls for the group to improve deliveries from 2021 levels by 5 to 10% while increasing sales by 8 to 13%.