VW Group (Part 1): 2017 sales revenue to increase by up to 4%
Launching 60 new models in 2017
VW Group's global vehicle sales grew by 3.8% year-over-year (y/y) to 10,391,000 units in 2016. While the company's emissions scandal and stagnant economies in Brazil and Russia impacted its vehicle sales, the number of units sold in Western and Central Europe as well as the Asia-Pacific. VW Group delivered a record-breaking number of vehicles and became the world's best-selling automaker for the first time, surpassing Toyota (including Daihatsu and Hino Motors) with sales of 10,175,000 units. The Group's vehicle sales for the period January-March 2017 increased by 1.3% y/y to 2,610,000 units owing to growth in Europe as well as in North and South America.
VW Group's sales revenue for 2016 also hit a record high at EUR 217,267 million, up 1.9% y/y. The Group's operating profit returned to positive territory at EUR 7,103 million, compared with operating losses of EUR 4,069 million in the prior year after negative special items of EUR 7,520 million including charges for the diesel scandal amounting to EUR 6,400 million. VW Group's sales revenue for the period January-March 2017 increased by 10.3% y/y to EUR 56,197 million, while operating profit grew by 26.9% y/y to EUR 4,367 million. Strong sales of new models such as the new Tiguan with a large profit margin and cost saving measures boosted the company's business results.
According to VW Group's outlook for 2017, which was revealed in May, the risks related to the diesel issue mentioned below will remain and challenges will arise from exchange rate volatility and intense competition. The Group's sales revenue is expected to increase by up to 4% y/y, and operating profit on sales is projected to be between 6.0% and 7.0% (it was 6.7% in 2016).
In the U.S., the VW Group reached a settlement with regulators and private plaintiffs in most of the lawsuits in connection with the diesel issue. The automaker is expected to pay up to USD 22.2 billion in the country. (VW recognized negative special items of EUR 22.6 billion related to the diesel scandal in 2015 and 2016, of which EUR 12.1 billion was allocated for litigation risks.) In Europe, the Group has been dealing with its diesel scandal mainly through software updates. Software in nearly four million vehicles has been updated as of March 2017. Challenges which may emerge in the future include suits instituted by the U.S. Department of Justice to clarify the responsibility of VW's management and lawsuits for damages filed by VW's shareholders.
VW Group's new future program "Together - Strategy 2025" that was unveiled in June 2016 and its new model launch plans including electrified models will be reported in a sequel to this report, "VW Group (Part 2)". The report will also cover VW's activities in its major markets; namely China and the U.S.
Related Reports: The VW Group and Issues with Diesel Emissions
Part 3 : Financial results for 2015 and the status of recalls (Jun. 2016)
Part 2 : Internal investigations and recall status (Dec. 2015)
Part 1 : Defeat devices and scandal's background (Oct. 2015)
Volkswagen Group Diesel Emissions Crisis (Sep. 2015)
VW in China: Strengthening SUV lineup - Launch "budget car" series in 2018 (Sep. 2015)
VW Group: Global sales falling from April 2015 - First-half revenue and profit grow over 10% due to euro depreciation (Sep. 2015)