VW Group (Part 1): Expanding SUV lineup, accelerating NEV offensive in China
January-September 2019 global sales drop 1.5%, operating profit rises 24.5% with growing SUV sales
The VW Group retained the title of the world’s largest automaker in 2018 for the third consecutive year with a record global sales volume of 10.83 million units, up by 0.9% from the previous year. The Group’s deliveries for the January-September period of 2019 decreased by 1.5% year-over-year (y/y) to 8.01 million units. This was mainly due to increased sales for the first nine months of 2018 as a result of customers bringing forward purchases in connection with the introduction of the new WLTP emissions test procedure in September 2018.
The Group’s sales revenue in 2018 grew by 2.7% y/y to EUR 235.8 billion and operating profit increased by 0.7% y/y to EUR 13.9 billion. During the first nine months of 2019, the automaker’s sales revenue rose by 6.9% to EUR 186.6 billion and operating profit grew by 24.5% to EUR 13.5 billion. As a result, operating return on sales increased from 6.2% to 7.3%. Improved product mix and price positioning including an increase in sales volume of the SUVs and reduced production costs had a positive effect on the Group’s operating profit.
The VW Group adjusted its outlook for deliveries to customers for 2019 downward from “a slight increase” to “being in line with the previous year” when it reported its financial results for the third quarter of 2019. The automaker lowered its deliveries forecast as automotive markets will contract faster than previously anticipated in many regions of the world due to an economic downturn in Europe and stagnant demand in China. At the same time, it confirms its original outlook for financial results and forecasts that sales revenue is expected to increase by up to 5% from the previous year and operating margin before special items is anticipated to be between 6.5 and 7.5% (7.3% in 2018).
In its new model launch plan, the VW Group will continue to expand its SUV lineup in both the premium and volume car segments as well as launch and update its sedan and coupe models. In 2019, Audi launched the Q3 Sportback coupe-like compact SUV and introduced the new A6L midsize sedan in China. In the volume car segment, the VW brand released the T-Cross, its smallest SUV, and will launch the eighth-generation Golf in 2019. In China, the VW brand introduced the new Sagitar compact sedan.
The VW Group is continuing its NEV and SUV offensives in China. In addition, the Group introduced the new Jetta brand and is launching one sedan and two SUV models under the new brand in 2019. In the U.S., the Group enjoyed increased sales for two consecutive years since 2017 thanks to successful launching of new SUVs and other models. The automaker will continue its SUV offensive and introduce three new SUV models during 2019-2021.
The VW Group’s electrification strategy, autonomous driving technology, mobility services and partnership with Ford will be reported in the sequel to this report, entitled “VW Group (Part 2)”.
|The eighth-generation VW Golf (Source: VW)|
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