VW raises full-year outlook, warns on growing chip shortage

Automotive Industry

Source: Automotive News Europe, 2021-05-06

Volkswagen Group raised its earnings outlook following robust first-quarter earnings, helped by a swift market recovery in China and higher demand for battery-powered vehicles.

Operating return on sales is forecast to come in between 5.5% and 7% in 2020, compared with a previous range of 5% to 6.5%, VW said in a statement on 6 May.

VW also raised its projection for net cash flow and net liquidity, while cautioning that the semiconductor shortage hitting the industry will have a "more significant impact" in the second quarter.

"We started the year with great momentum and are on a strong operational course," CEO Herbert Diess said in the release.

First-quarter operating profit surged to €4.8bn ($5.8bn) from €900m in 2020, when the COVID-19 pandemic shuttered showrooms and factory floors. The operating return on sales jumped to 7.7%.

Total deliveries during the first quarter jumped 21% to 2.43m vehicles, mainly driven by China. Deliveries of electrified models more than doubled to 133,300 vehicles, of which 59,900 were battery-electric vehicles and the remainder plug-in hybrids.

VW Group's better outlook is also driven by improved demand for high-margin premium cars from its Porsche and Audi brands, a trend that has also been observed by rivals General Motors, Daimler, Ford and Stellantis. During the quarter deliveries of Porsche and Audi cars were both up about a third year-on-year. 

VW is at a pivotal moment in getting its electric-car push off the ground and narrow the gap to Tesla.

Among the new models in 2021 are the VW ID4 and the Audi Q4 e-tron, two crossovers about the size of Tesla's Model Y.

VW has targeted selling about 600,000 purely battery-powered cars in 2021 and expects to comply with tightening European emission rules.

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