VW Group: Global sales falling from April 2015

First-half revenue and profit grow over 10% due to euro depreciation

2015/09/15

Summary

VW Groupの世界販売台数と前年比 2015年月別販売台数と前年比

 The VW Group had another record year in 2014 in terms of unit sales, sales revenue, and operating profit. And in the first half of 2015, the VW Group became the global leader, surpassing Toyota in terms of unit sales, or vehicle deliveries, worldwide. However, since April 2015, its deliveries have started to decline and the Group's global sales in the first half of the year declined 0.5% to 5.04 million units while Toyota's unit sales fell 1.5% to 5.02 million units.

 Deliveries in China, the VW Group's largest market, began to decrease from March. And in the struggling markets in Russia and Brazil, the Group's deliveries fell 3.9% in the first half of 2015. The y/y decline has continued to grow, reaching 13.6% in July. While deliveries rose in North America and Western Europe, they were not large enough to offset the negative growth in emerging markets.

 VW-brand passenger cars, the best-selling brand among the VW Group brands, experienced a 3.9% decline in unit sales. And the brand's low profitability has not recovered, even though its operating profit grew 2.7% y/y.

 The Group's performance in the first half of 2015 increased in terms of sales revenue and operating profit, thanks to the depreciation of the euro and higher sales of more lucrative brand vehicles such as those built by Audi and Porsche.

 Since the VW Group's operating structure has become too large to be easily managed, the Group is reportedly going to be reorganized into four holding companies to enable faster decision-making.



Related reports:
Sales in China drop to 1.5% in first half of 2015 (Aug. 2015)
VW expects to sell 10 million units in 2014, compete for global sales lead (Sep. 2014)

 

Global sales in 2014: Passenger car sales increase by 4.9%, VW-brand passenger cars barely increased, by 1.6%

 The VW Group's global vehicle sales in 2014 increased 4.2% y/y, from 9.73 million units in 2013 to 10.14 million units. Sales of passenger cars alone increased 4.9% y/y, from 9.05 million to 9.49 million units, of which 2.91 million units were sold in Western Europe (up 6.5%), 880,000 units in North America (unchanged), and 3.67 million units in China (up 12.3%). (In 2014, 38.7% of the Group's global sales were generated in China.) The Group saw sluggish sales in South America, with deliveries declining 17.0% to 690,000 units, due to slow sales both in Brazil and Argentina.

 Among the Group's brands, the high-profit earning brands, Audi and Porsche, increased their deliveries by more than 10% to 1.74 million units and 190,000 units, respectively. A total of 6.12 million VW-brand passengers cars were sold, which was a slight increase of 1.6%. Sales of SEAT vehicles in 2014 increased 10.0% to 390,000 units, but the unit posted an operating loss for the full year.

 

 



VW Group's unit sales fall from April

VW Group乗用車地域別販売台数 VW Group乗用車 ロシア、ブラジル、中国での販売台数


The VW Group sold 5.04 million units (a 0.5% decrease y/y) in the first half of 2015. The Group became the global leader in the first half of 2015 for the first time ever, surpassing unit sales by the Toyota Group (includes Daihatsu and Hino) that sold 5.02 million units (down 1.5%). GM came in third, with 4.86 million units (down 1.2%).

However, in April 2015 the VW Group's monthly global deliveries started to fall below those of the previous year. They decreased 4.3% in June alone. According to the VW Group, conditions vary among markets and the Group couldn't avoid being affected by the mixed-market conditions. The Group is enjoying brisk sales in North America and Western Europe, but suffering from slow sales in Russia and Brazil. In March sales in China also began to fall below the sales level achieved during the previous year, with the Group experiencing two-digit negative growth since May.


The following is a breakdown of car sales by market for the first half of 2015. Sales increased 6.5%, from 1.52 million to 1.62 million units in Western Europe, which is still recovering. Sales increased in North America also, from 422,000 units to 447.000 units.

In contrast to these increases, the Group's car sales fell in South America, by 20.3%, from 330,000 to 260,000 units. The Group had already experienced a 17.0% decline in South America in 2014. Car sales fell in China also, which is the largest market for the Group, by 3.9% from 1.81 million to 1.74 million units.

The Group's passenger-car sales by brand fell in the first half of 2015, declining 3.9% for VW-brand vehicles that are popular in China and other emerging markets. As for the Group's premium brands, Audi recorded a 3.8% increase while Porsche enjoyed strong sales, which increased 29.8%. SKODA, a popular brand in Europe, experienced a 4.2% increase while SEAT, which is sold exclusively in the European market, saw an 8.2% increase.


VW Group Deliveries

2013 2014 Jan.-Jun.
2014
Jan.-Jun.
2015
2015/2014
Passenger cars 9,047,417 9,490,921 4,751,927 4,729,383 -0.5%
Commercial vehicles 683,170 646,466 313,758 309,827 -1.3%
Total 9,730,587 10,137,387 5,065,685 5,039,210 -0.5%
Passenger car deliveries by market and brand
2013 2014 Jan.-Jun.
2014
Jan.-Jun.
2015
2015/2014
Europe/Other markets 3,715,349 3,893,726 2,012,001 2,092,239 4.0%
of which: Western Europe 2,734,534 2,912,905 1,519,781 1,619,156 6.5%
North America 884,440 884,454 421,982 447,255 6.0%
of which: USA 611,747 599,734 287,953 294,992 2.4%
South America 831,465 690,101 330,701 263,467 -20.3%
Asia-pacific 3,616,163 4,022,640 1,987,243 1,926,422 -3.1%
of which: China 3,266,235 3,668,433 1,811,195 1,739,904 -3.9%
Worldwide 9,047,417 9,490,921 4,751,927 4,729,383 -0.5%
VW Passenger cars 6,021,750 6,118,617 3,065,899 2,945,709 -3.9%
Audi 1,575,480 1,741,129 869,357 902,389 3.8%
SKODA 920,750 1,037,226 522,499 544,300 4.2%
SEAT 355,004 390,505 200,140 216,463 8.2%
Bentley 10,120 11,020 5,254 4,639 -11.7%
Lamborghini 2,121 2,530 956 1,882 96.9%
Porsche 162,145 189,849 87,803 113,984 29.8%
Bugatti 47 45 19 17 -10.5%

Source: VW Group Financial Report

Negative growth of 3.7% in July; downward revision of full-year 2015 outlook

At the start of the year, the VW Group had forecast "moderate growth" in terms of full-year sales in 2015. Then, when the Group released its financial results for the first half of 2015, it revised its sales forecast downward to "same as prior year, at 10.14 million units". However, its global sales declined in July, which became the fourth month in a row of y/y monthly sales declines. Even though the Group enjoyed strong sales in Western Europe and North America, they were not high enough to offset the sales decreases in Russia (down 40.3% to 98,000 units), Brazil (down 30.6% to 246,000 units) and China (down 13.6% to 247,000 units). The VW Group is now in a state of uncertainty as to whether it can achieve its full-year forecast of selling 10-million units.

VW Group deliveries in 2015 by month

Jan. Feb. Mar. Apr. May Jun. Jul. Jan.-Jul.
Worldwide 2015 817,600 704,100 968,300 853,200 858,000 840,400 792,100 5,833,700
2014 811,500 681,600 946,900 864,300 880,900 877,900 822,200 5,885,300
2015/2014 0.7% 3.3% 2.3% -1.3% -2.6% -4.3% -3.7% -0.9%
Deliveries in China in 2015 by month
China 2015 351,400 231,600 315,400 291,600 553,000 247,000 1,990,000
2014 344,500 219,400 317,200 308,900 624,000 286,000 2,100,000
2015/2014 2.0% 5.6% -0.6% -5.6% -11.4% -13.6% -5.2%

Source: VW Group Financial Report and monthly press releases
(Note) Monthly deliveries in China for May and June were not included in the VW Group's announcement.



First-half revenue and profit grow over 10% due to euro depreciation

連結売上高と営業利益 The VW Group's sales revenue in the first half of 2015 increased 10.1% to EUR 108.8 billion. Its operating profit increased to EUR 6.82 billion, up 10.3% y/y, from EUR 6.19 billion. The depreciation of the euro along with higher sales of high-priced and profitable Audi and Porsche cars contributed to the increase in sales revenue and operating profit.

The Group posted profits of EUR 2.74 billion in terms of equity gains from Chinese operations, compared to EUR 2.62 billion a year earlier. (Sales revenue and operating profit from Chinese operations are not accounted for in the VW Group's consolidated net sales and operating profit.)

The VW Group was highly visible in struggling automobile markets around the world. At the same time, the Group will keep an eye on macroeconomic trends worldwide, especially in the increasingly unstable markets in Russia, Brazil and China.

The Group's operating margin in the first half of 2015 remained unchanged at 6.3%. The Group is forecasting a 5.5 to 6.5% operating margin for full-year 2015, as announced in its Half-Yearly Financial Report.

The Group's sales revenue and profits in first half of 2015 rose primarily due to favorable currency translation. The euro depreciated in terms of the U.S. dollar, from around EUR 1 to USD 1.35 in the first half of 2014, to USD 1.10 a year later. However, the euro bottomed out in August 2015 and seems to be slowly appreciating against the USD. The Group does not anticipate sales and profit increases or decreases in the second half of 2015 due to currency translation.

VW Group' Income Statement

(in millions of EUR)
2009 2010 2011 2012 2013 2014 Jan.-Jun.
2014
Jan.-Jun.
2015
Sales revenue 105,187 126,875 159,337 192,676 197,007 202,458 98,808 108,776
Operating profit 1,855 7,141 11,271 11,498 11,671 12,697 6,186 6,820
Profit before tax 1,261 8,994 19,926 25,487 12,428 14,794 7,777 7,664
Profit after tax 911 7,226 15,799 21,884 9,145 11,068 5,716 5,663

Source: VW Group Financial Report

Profitability and contribution by brand

主要乗用車ブランドの営業利益と営業利益率 Among Group brands, VW-brand passenger cars were the least profitable, posting an operating profit of EUR 1.4 billion (operating margin of 2.7%) in the first half of 2015. Around 60% of the Group's operating profit earned at its automotive division was earned by Audi (EUR 2.9 billion) and Porsche (EUR 1.7 billion).

The SEAT brand, which was in the red in 2014, turned profitable in the first half of 2015, achieving an operating margin of 1.2%.


Vehicle sales, sales revenue and operating profit by brand

Vehicle sales (thousand vehicles) Sales revenue (€ million)
2013 2014 Jan.-Jun.
2014
Jan.-Jun.
2015
2013 2014 Jan.-Jun.
2014
Jan.-Jun.
2015
VW Passenger Cars 4,704 4,583 2,302 2,251 99,397 99,764 49,259 53,578
Audi 1,349 1,444 750 784 49,880 53,787 26,690 29,784
SKODA 719 796 426 421 10,324 11,758 5,974 6,421
SEAT 459 501 258 286 6,874 7,699 3,948 4,469
Bentley 11 11 6 5 1,679 1,746 887 939
Porsche 155 187 89 109 14,326 17,205 8,162 10,850
VW Commercial vehicle 436 442 221 231 9,370 9,577 4,724 5,223
Scania 80 80 38 38 10,360 10,381 5,067 5,182
MAN 140 120 58 50 15,861 14,286 6,699 6,719
VW China 3,038 3,506 1,847 1,743
Other (1,364) (1,454) (788) (827) (40,047) (45,885) (23,026) (27,407)
Financial services 18,983 22,139 10,423 13,018
VW Group 9,728 10,217 5,207 5,090 197,007 202,458 98,808 108,776
(Notes) 1. Vehicle sales in China are grouped under "VW China" and are not accounted for in the brand-specific figures above.
2. Vehicle sales to the dealer organization (5,207,000 units in the first half of 2014 and 5,090,000units in the same period in 2015) include those sold to joint ventures in China. VW does not publish vehicle sales to dealers, except for those to joint ventures in China.
3. Sales revenue and operating profit for vehicles produced in China are not accounted for in the tables above. Below, the "proportion of operating profit at Chinese operations" is added to the Group's profit before tax, in order to account for results from the Group's operations in China.
Sales revenue (in millions of EUR) Operating profit margin
2013 2014 Jan.-Jun.
2014
Jan.-Jun.
2015
2013 2014 Jan.-Jun.
2014
Jan.-Jun.
2015
VW Passenger cars 2,894 2,476 1,012 1,428 2.9% 2.5% 2.1% 2.7%
Audi 5,030 5,150 2,671 2,914 10.1% 9.6% 10.0% 9.8%
SKODA 522 817 425 522 5.1% 6.9% 7.1% 8.1%
SEAT (152) (127) (37) 52 (2.2%) (1.6%) -0.9% 1.2%
Bentley 168 170 95 54 10.0% 9.7% 10.7% 5.8%
Porsche 2,579 2,718 1,398 1,698 18.0% 15.8% 17.1% 15.6%
VW Commercial vehicle 448 504 280 268 4.8% 5.3% 5.9% 5.1%
Scania 974 955 476 503 9.4% 9.2% 9.4% 9.7%
MAN 319 384 222 185 2.0% 2.7% 3.3% 2.8%
VW China - - - - - - - -
Other (2,725) (2,052) (1,132) (1,605)
Financial services 1,614 1,702 776 970 8.5% 7.7% 7.4% 7.5%
Special items (170)
VW Group 11,671 12,697 6,186 6,820 5.9% 6.3% 6.3% 6.3%

Source: VW Group Financial Report


Proportion of operating profit at Chinese joint ventures

(in millions of EUR)

2009 2010 2011 2012 2013 2014 Jan.-Jun.
2014
Jan.-Jun.
2015
Proportion of Operating profit 981 1,907 2,616 3,678 4,296 5,182 2,622 2,744

Source: VW Group Financial Report



Major reorganization plan from long-term perspective

 In May 2015, VW Group CEO Martin Winterkorn announced at an internal meeting that he will unveil a major reorganization plan for the VW Group by October 2015 at the latest. The plan will place priority on the Group's immediate needs such as sales growth in the U.S. for the VW brand, correcting the brand's low profitability, and launching low-cost cars for China as soon as possible. The VW Group is already working to reduce costs by EUR 5 billion by 2017, in order to narrow the profitability gap with Toyota.

 

Plans to establish four holding companies

 In June 2015, it was reported that the VW Group's corporate structure will be reorganized into four holding companies: the VW, SKODA and SEAT passenger car group; the Audi group; the Porsche, Bentley and Bugatti upmarket car group; and the commercial-vehicle group. The final plan will be announced in September.

 The VW Group has become a giant organization with 600,000 employees worldwide, 119 factories and 12 brands. At present, all brands are under the centralized supervision of the VW headquarters, but each is granted autonomy to maximize its competitive advantages. Due to this centralized strategy, the Group was often seen to be too slow to react to market trends. The objectives of the reorganization are to make decision-making quicker and improve efficiency of the VW, SKODA and SEAT passenger-car brands in particular.

VW Group likely to be divided into four holding companies

Passenger-car group  VW (passenger-car segment), SKODA, SEAT
Audi group  Audi, Lamborghini (already under Audi's capital group),
Ducati (a motorbike manufacturer under the Audi group)
Upmarket group  Porsche, Bentley, Bugatti
Commercial-vehicle group  VW (commercial-vehicle segment), Scania, MAN

Source: Automotive News article on June 15, 2015

 

 



Production Forecast by LMC Automotive: VW Group's production to be 9.8 million units in 2015

(LMC Automotive、August 2015)

VW Groupの生産予測 According to LMC Automotive's forecast ( August 2015), the VW Group's light-vehicle production in 2015 will be 9.8 million units, down by 324,000 (3.2%) from 2014, mainly due to lower production volumes in Brazil (168,000), Russia (70,000) and China (150,000). The group's production, however, will increase to 11.47 million units in 2018, up 13.4% from the level in 2014.

 By country, LMC Automotive predicts that production in China in 2015 will be 3.4 million units, down by 150,000 units. Production in China in 2018 will be 4.28 million units, up 20.6% from the level in 2014, and is expected to account for 37.3% of the Group's global production. Production in Germany in 2016 is predicted to be 2.68 million units, up by 3.8% from 2014. However, production in Germany will decrease by 3.6% from the 2014 level to 2.49 million units in 2018. Production in Mexico is expected to see a sudden rise to 747,000 units, up 57.2% from 2014, supported by a new Audi plant which will start production in 2016.

 By brand, production of VW-brand will be 7.4 million units in 2018, up 11.7% from 2014.

 The rate of growth of the brand, however, is slightly lower than the rate of growth of its total production, 13.4%. Production of Audi and SKODA brands will grow faster between 2014 and 2018. In 2018, production of Audi-brand vehicles are forecast to be 2.13 million units (up 17.3% compared to 2014), and production of Skoda brand will be 1.28 million units.

 LMC Automotive commented: "VW's increasingly global footprint continues to underpin the group's strategy for balancing risk. Naturally, this strategy creates a whole spectrum of output growth and contraction performances, according to the local health and competitiveness of the group's brands in each local market"

VW Group's production in 2015 forecast to be 9.8 million units (LMC Automotive)

GLOBAL
MAKE
2012 2013 2014 2015 2016 2017 2018
Volkswagen
Group
Volkswagen 6,295,346 6,474,689 6,620,174 6,313,647 6,514,074 6,959,062 7,397,703
Audi 1,472,509 1,612,986 1,814,271 1,803,005 1,932,302 2,081,258 2,128,064
Skoda 940,347 917,867 1,065,606 1,047,690 1,155,095 1,242,750 1,281,457
Seat 321,086 352,817 395,258 399,573 383,617 412,157 417,279
Porsche 149,889 165,587 202,905 209,377 206,865 215,298 224,376
Bentley 9,108 10,551 11,002 11,150 12,610 13,235 13,905
Lamborghini 2,287 2,274 2,650 3,816 4,111 3,949 5,974
Total 9,190,572 9,536,771 10,111,866 9,788,258 10,208,674 10,927,709 11,468,758
China Volkswagen 2,060,930 2,435,120 2,731,753 2,655,094 2,778,334 3,032,409 3,248,875
Audi 333,433 419,003 529,214 481,557 549,511 589,321 615,844
Skoda 230,481 241,708 289,953 264,293 294,516 354,280 416,921
China 2,624,844 3,095,831 3,550,920 3,400,944 3,622,361 3,976,010 4,281,640
Germany Volkswagen 1,451,479 1,453,317 1,533,113 1,589,630 1,634,790 1,569,610 1,517,013
Audi 814,854 852,330 845,190 831,769 836,815 838,706 823,147
Porsche 149,889 165,587 202,905 209,377 206,865 189,476 149,079
Bentley 0 55 388 165 0 0 0
Germany 2,416,222 2,471,289 2,581,596 2,630,941 2,678,470 2,597,792 2,489,239
Mexico Volkswagen 602,664 515,952 475,111 473,432 464,381 493,921 566,017
Audi 0 0 0 0 62,206 169,545 180,979
Mexico 602,664 515,952 475,111 473,432 526,587 663,466 746,996
Czech Republic Skoda 559,730 532,007 627,025 668,099 699,690 720,190 699,887
Seat 5,000 21,771 16,541 17,338 38,784 38,106 36,946
Czech Republic 564,730 553,778 643,566 685,437 738,474 758,296 736,833
Spain Volkswagen 287,287 289,577 305,700 274,307 326,193 305,235 290,977
Seat 270,284 285,567 329,838 335,034 303,846 298,779 275,695
Audi 106,817 104,500 112,815 114,934 105,358 114,519 124,729
Spain 664,388 679,644 748,353 724,275 735,397 718,533 691,401
Brazil Volkswagen 851,845 761,813 600,388 431,634 413,410 439,260 472,371
Audi 0 0 0 1,244 3,801 8,571 8,727
Brazil 851,845 761,813 600,388 432,878 417,211 447,831 481,098
Slovakia Volkswagen 218,908 212,889 194,221 174,632 172,015 175,411 188,959
Porsche 0 0 0 0 0 25,822 75,297
Audi 54,562 63,543 59,528 78,239 79,543 76,532 71,228
Skoda 36,687 42,971 41,974 41,479 40,574 39,705 37,896
Seat 26,409 25,489 26,267 24,789 21,727 19,461 21,231
Lamborghini 0 0 0 0 0 183 2,533
Slovakia 336,566 344,892 321,990 319,139 313,859 337,114 397,144
Portugal Volkswagen 93,157 71,210 79,638 75,728 70,131 163,752 209,926
Seat 19,393 19,990 22,612 22,412 19,260 55,811 83,407
Portugal 112,550 91,200 102,250 98,140 89,391 219,563 293,333
Poland Volkswagen 161,997 168,814 176,197 168,358 179,215 229,001 233,536
Skoda 0 0 0 252 26,770 27,357 23,344
Poland 161,997 168,814 176,197 168,610 205,985 256,358 256,880
USA Volkswagen 152,543 137,662 117,628 102,744 124,481 163,751 214,098
USA 152,543 137,662 117,628 102,744 124,481 163,751 214,098
India Volkswagen 71,080 74,184 102,735 105,824 123,002 140,432 150,732
Skoda 35,580 17,806 14,267 17,582 17,282 20,121 21,631
Audi 6,180 5,680 7,551 10,332 10,396 12,658 13,852
India 112,840 97,670 124,553 133,738 150,680 173,211 186,215
Russia Volkswagen 119,163 134,178 111,296 81,325 74,198 76,900 90,782
Skoda 60,759 66,162 82,160 49,388 65,395 67,989 66,507
Audi 0 4,205 9,247 1,963 3,865 0 0
Russia 179,922 204,545 202,703 132,676 143,458 144,889 157,289
Hungary Audi 33,553 42,851 135,232 165,517 161,362 135,016 150,559
Hungary 33,553 42,851 135,232 165,517 161,362 135,016 150,559
Belgium Audi 123,110 120,522 115,382 117,412 119,445 136,390 138,999
Belgium 123,110 120,522 115,382 117,412 119,445 136,390 138,999
South Africa Volkswagen 106,241 105,969 110,653 110,955 84,339 97,487 138,306
South Africa 106,241 105,969 110,653 110,955 84,339 97,487 138,306
Argentina Volkswagen 107,904 106,711 72,109 61,988 55,339 56,494 58,904
Argentina 107,904 106,711 72,109 61,988 55,339 56,494 58,904
UK Bentley 9,108 10,496 10,614 10,985 12,610 13,235 13,905
UK 9,108 10,496 10,614 10,985 12,610 13,235 13,905
Malaysia Volkswagen 1,486 4,337 9,351 6,826 9,233 8,329 8,924
Malaysia 1,486 4,337 9,351 6,826 9,233 8,329 8,924
Ukraine Skoda 14,556 11,484 3,649 2,642 5,378 7,035 8,835
Ukraine 14,556 11,484 3,649 2,642 5,378 7,035 8,835
Nigeria Volkswagen 0 0 0 1,008 4,836 6,831 7,893
Nigeria 0 0 0 1,008 4,836 6,831 7,893
Kazakhstan Skoda 2,554 5,729 6,578 3,955 5,490 6,073 6,436
Kazakhstan 2,554 5,729 6,578 3,955 5,490 6,073 6,436
Italy Lamborghini 2,287 2,274 2,650 3,816 4,111 3,766 3,441
Italy 2,287 2,274 2,650 3,816 4,111 3,766 3,441
Indonesia Volkswagen 0 456 281 162 177 239 390
Audi 0 352 112 38 0 0 0
Indonesia 0 808 393 200 177 239 390
Canada Volkswagen 8,662 2,500 0 0 0 0 0
Canada 8,662 2,500 0 0 0 0 0
Source: LMC Automotive "Global Automotive Production Forecast (August 2015)"
(Note) 1. Data is only for small-size vehicles such as passenger cars and light commercial-vehicles with gross vehicle weights of under 6 tons.
2. All rights reserved. Reproduction in whole or in part without permission from LMC Automotive is prohibited.
3. For more information or inquiries about forecast data, please contact LMC Automotive.

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