VW confirms 2020 outlook; expects September delivery growth to continue

Automotive Industry

Source: Automotive News Europe, 2020-09-30

Volkswagen Group CEO Herbert Diess said the automaker's September orders have been higher than last year and that he expects the positive trend to continue in the fourth quarter.

In a sign that VW is recovering from the coronavirus pandemic that sent car sales plummeting, Diess also reaffirmed the company's target of positive operating profit for the year.

"The restructuring of the company has not been slowed down by corona, but accelerated," Diess said in prepared remarks at the company's annual shareholder meeting on Wednesday 30 September.

The pandemic has left the global car sector mired in the worst crisis in decades, just as it faces pressure to invest in new technology as the combustion era draws to a close.

For the first eight months, VW Group's deliveries are still down 22% to 5.6m vehicles with the sharpest drop of 31% in its home market of western Europe.

At the shareholder's meeting, Diess was trying to convince investors that the electric offensive he has started will help the company compete with Tesla.

The shareholders, by contrast, focused their questions on other matters entirely, notably the criminal trial taking place on the same day.

"What will you do to make sure the stock market can honor the ambitious strategy of the VW Group in the area of electric vehicles and is not frequently scarred by reports about scandals?" Ingo Speich, a fund manager at Deka Investment, asked management in a statement issued before Wednesday's meeting.

Prosecutors on Wednesday 30 September began presenting their cases against former Audi chief Rupert Stadler and other executives for alleged roles in the diesel scandal.

Lots of tumult

For all VW's efforts to put its polluting past in the rear-view mirror, probes into its Audi and Porsche divisions' engines are ongoing. A racist marketing campaign also recently caused an uproar; an eavesdropping affair generated unflattering headlines; and outsiders within the insular company's upper ranks have resigned, been demoted or reassigned.

Diess is among those caught up in the tumult. Run-ins with powerful labor leaders and the automaker's board cost him the role of directly controlling the company's main passenger-car operations.

"This year's infighting between CEO Herbert Diess, parts of the supervisory board and the workers council is a warning signal concerning the operational performance and the willingness and speed of change at VW," Arndt Ellinghorst, a Bernstein analyst wrote in a Sept. 18 report.

Diess, 61, came under fire over software problems that delayed the rollout of the ID3 electric car and the Golf hatchback earlier this year.

The ID3 and the upcoming ID4 crossover are the first mass-market EVs that VW is launching in the wake of the diesel saga that has cost the company about €32bn ($37bn) and is far from over.

Chasing Tesla

Diess has budgeted €33bn over five years to build the world’s biggest electric-car fleet, leading some analysts to predict that VW will overtake Tesla as the EV-market leader by 2022.

Bernstein is skeptical, though, that VW Group can smoothly transition from internal combustion engines and turn its vast industrial scale into a competitive advantage.

“We would warn investors not to solely look at VW from an EV perspective,” Ellinghorst wrote earlier this month. “Without a bold and focused restructuring of VW’s overly complex and inefficient traditional ICE business, the move into the BEV world bears many risks.”

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