VW expects to sell 10 million units in 2014, compete for global sales lead

Audi, Porsche brands and China drive profits; VW to cut costs in other areas



VW vs. Toyota vs. GM

First half of 2014: VW comes in second place in global unit sales by margin of 30,000 units

  The Volkswagen Group sold 5.07 million units in the period of January to June 2014, up 5.6% from a year earlier. In the same period, Toyota Motor Corporation sold 5.1 million units, up 3.8% year-over-year (y/y), whereas General Motor Corporation sold 4.92 million units, up 1.4% y/y. VW outsold GM to take up second place and closed the gap on Toyota's top global sales by just 30,000 units.

2014 full year: VW may achieve global sales lead

  On August 5, 2014, Toyota revised downward its unit sales plan for the 2014 calendar year to 10.22 million units, a y/y increase of 2%. The VW Group claims that it will achieve its medium-term sales target of more than 10 million units per year by 2018, which was set in its "Strategy 2018," four years ahead in 2014. However, the detailed outlook is yet to be announced. If the company achieves the same growth rate of the first half in the second half period as well, the unit sales for the 2014 full year will be around 10.27 million units. The top global sales position for the full year may be determined by a very small margin of just several tens of thousands of units.

Sales supported by China and Audi/Porsche brands

 The VW Group's sales are supported by its two premium brands, Audi and Porsche, and the Chinese market. Looking at the group's business results in the period from January to June 2014, the combined unit sales of Audi and Porsche accounts for only 16% of the group's total (excluding its non-consolidated Chinese operations) but their combined operating profits account for around 80% of the total of the group's Automotive Division (excluding its non-consolidated Chinese operation). The group's Chinese joint ventures are accounted for using the equity method. The equity method profit of the Chinese joint venture in the first half of 2014 was EUR 2.6 billion, which accounted for a third of the group's profit before tax.

Top concerns: U.S., Brazil, India and VW brand

  Meanwhile, the group's top concerns are the U.S., Brazilian and Indian markets, where sales are declining, and the VW passenger car brand. The group aims to reclaim its market share in the U.S., Brazilian and Indian markets by making aggressive investments to promote local production over the coming years, and by introducing models that are suitable for the respective markets. The unit sales by the VW passenger car brand (except in China) are declining and its operating profit margin is just 2.1% in January to June 2014. The group plans to implement a cost-cutting strategy for the passenger car brand.

LMC Automotive sales forecast

  LMC Automotive forecasts that the unit sales of the VW light vehicles (excluding medium-duty and heavy-duty commercial vehicles) for 2014 will increase to 9.59 million units, up 3.8% y/y. The unit sales will continue to increase in and after 2016 as well to reach 11.37 million units in 2017.

"Strategy 2018" and VW's performances

VW Group sales volume (units) 7.20 million 8.27 million 9.28 million 9.73 million 10 million
or more
10 million
or more
VW Group pre-tax profit ratio 7.1% 7.8% (note) 6.9% (note) 6.3% (H1 7.9%) 8.0% or more
Automotive Division CAPEX to sales 5.0% 5.6% 5.9% 6.3% (H1 4.1%) 6.0%
Automotive Division return on investment 13.5% 17.7% 16.6% 14.5% - 16% or more

Note 1: The group pre-tax profit ratio is 11.9% for 2011 and 13.2% for 2012 if incomes from the reassessment of the put/call options for Porsche's shareholding are included.

Related Reports:
VW’s trends in China (Part 1): Production set to expand significantly through 2017 (Nov. 2013)
VW's trends in China (Part 2): Sales target revised upward to 3.6 million by 2015 (Nov. 2013)

Beijing Auto Show 2014:
VW and Skoda exhibits all-new Golf R, NMC, Skoda Rapid Sport (May 2014)