Volkswagen profit falls on EV investments

The Volkswagen brand turned over €84.6 billion in revenues last year, despite being pole-axed in the second half of the year by its struggles with the Worldwide Light Vehicle Harmonized Test Protocol (WLTP).

Yet its profits slipped down to 3.8 percent of its turnover, from 4.2 percent in 2017, in a slip mostly reflected across the rest of the Group’s brands.

That didn’t stop the Volkswagen Group from posting a slight rise in operating profit to €13.92 billion for 2018, the company revealed today.

“2018 was a successful year for the Volkswagen Group,” Dr Diess insisted.

“We performed very well in spite of strong headwinds. Our Group brands worked very hard to help achieve this result.

“We must now redouble our efforts, step up the pace and resolutely continue the transformation we have begun.”

Volkswagen Group CEO, Dr Herbert Diess, pointed the finger at both WLTP delays and investments in electric-car development to explain the modest improvements.

For all that, one of the biggest pronouncements from today’s annual results conference was that Volkswagen was looking to take advantage of China’s loosening of joint-venture ownership rules to take a bigger stake in its two Chinese operations.

China is the biggest car market in the world, as well as Volkswagen’s biggest market, and it has a 50-percent stake in its Shanghai-based JV and a 40-percent slice of its Beijing-based operation. Dr Diess insisted it would look at potential stake increases early next year.

While Volkswagen delivered 4.4 million cars across Europe’s 27 member states, it shifted 4.2 million cars in China alone last year.

"Volkswagen’s future hinges on China. It is our single most important market and will remain so," he said.

It wasn’t all mediocre news for Volkswagen, though, with luxury British brand Bentley plummeting 16 percent over its already-disappointing 2017 results. Its return-on-investment fell to -18.6 percent (down from 3.0% in 2017), forcing the Group to give Porsche CEO Oliver Blume operational control over the brand.

Blume now heads up a conglomerate called the Sport Luxury brand group, including Lamborghini and Bentley, with Bentley selling 9115 cars last year and failing to take advantage of its entry into the SUV world.

Porsche, on the other hand, remained the Group’s shining light, with a profit margin of 17.4 percent, ahead of Scania’s 10 percent, Skoda’s eight percent and Audi’s 7.9 percent.