In 2020, the Volkswagen Group's net profit was only 8.82 billion euros, which is also a good level of profit performance, but it is still down 37% compared to its own performance in 2019. The growth of important financial indicators such as revenue, operating profit, and sales volume was also negative. At that time, the Volkswagen Group was in crisis.
But just a year later, volkswagen group easily defused the crisis.
On Friday, German time, Volkswagen Group announced its 2021 financial report. While full-year sales were down 4.5 percent to 8.882 million units, China was down even more violently – with total deliveries of 3.3048 million units, down 14.1% year-on-year. But this still can't stop volkswagen group from reversing the unfavorable situation in 2020 in 2021.
In 2021, the Total Revenue of the Volkswagen Group increased by 12.3% year-on-year to EUR 250.2 billion; operating profit doubled to EUR 19.28 billion, returning to 7.7% from 4.3% in 2020; Pretax profit rose by 72.5% year-on-year to EUR 20.1 billion; and net profit after tax reached EUR 15.4 billion, an increase of 74.8% year-on-year.
A string of positive growth highlights Europe's largest automaker's ability to respond to uncertain risks such as the pandemic and supply chain crisis.
On Tuesday, Beijing time, Volkswagen Group held the 2022 annual media communication meeting at its headquarters in Wolfsburg, Germany, and Chinese media were invited to participate online. Volkswagen Group CEO Herbert Diess attributed the success of the past year to an efficient product portfolio and cost control as well as efficiency gains.
"We increased the Group's sales revenue by 12% by allocating scarce chips to highly profitable models and reducing sales incentives." Dees introduced.
Arno Antlitz, CFO of Volkswagen Group, added: "One of the most important advances in our structural transformation compared to 2019 has been the improvement of process efficiency and synergies, which has allowed us to quickly make the decision to cancel some projects with bad prospects, while also significantly reducing indirect costs.
In July 2021, Volkswagen Group CEO Herbert Diess explained the "NEW AUTO" strategy to the media
It is reported that the Volkswagen Group has completed ahead of schedule to reduce indirect costs (excluding research and development and capital expenditures) by 2023. Compared to 2019, the Group saved 4 billion euros in costs. This has driven the Doubling of the Volkswagen Group's operating profit.
The Volkswagen Group emerged from its operational crisis in just one year, reflecting the initial results of the transformation that Diess had pushed so hard to promote. "Our goal is to accelerate the Group's transformation from a traditional car manufacturer to a software-driven technology company." Dies explained the future positioning of the Volkswagen Group.
Sales will increase by 5% to 10% this year
Although we ordinary people can visually perceive that 2022 may be more difficult than 2021, as a world-class company ranked high in the global top 500, Volkswagen Group has made optimistic predictions based on past successful experience.
Although the industry is still facing supply chain pressures such as structural shortages of chips, Volkswagen Group believes that this shortage will gradually improve this year.
Therefore, the Volkswagen Group aims to increase the delivery volume of the entire group by 5% to 10% year-on-year this year, that is, the annual sales volume is between 9.32 million and 9.77 million units; sales revenue will increase by 8% to 13%; and the operating return will increase to between 7% and 8.5%.
The Volkswagen Group also planned growth targets for net cash flow, net assets and net current assets, which showed the manufacturer's self-confidence in the industry and self-sustainability in terms of funds.
However, like many global companies, the most intractable problem for the Volkswagen Group at the moment may be the impact of the current world situation on the automotive industry. The most direct impact is that most of the European car companies' automotive wiring harness production lines are located in Ukraine, and this situation has forced many auto factories to cut production or stop production.
Diess said volkswagen group has set up a task force to deal with this emergency, and they are building a new wire harness production line in Europe and gradually shifting the production line to China and the Americas.
The magic weapon to success has been found in the United States
Another success of the Volkswagen Group in 2021 is that it has finally found a magic weapon to make a profit in the US market.
For a long time in the past, Volkswagen was unable to make a profit in the U.S. market. Diess mentioned that when he joined the company in 2015, it was one of the most pressing issues facing Volkswagen. After years of hard work, the Volkswagen brand has finally returned to profitability in three markets: Canada, the United States and Mexico, and Diess defines this moment of success as "one of Volkswagen's milestone achievements in 2021.".
In 2021, Volkswagen's Atlas series, Tuguan and ID.4, a total of five SUVs sold in the U.S., accounted for 70% of the Group's total sales in the U.S. This is also the key to Volkswagen's ability to reverse the decline in the United States.
Volkswagen Group CFO Arno Antlitz said more than 90 percent of Volkswagen sales in the U.S. are produced in North America. "The SUV offensive has made our product positioning and price superior. The introduction of pure trams has allowed us to accumulate popularity. Moreover, the development of the Volkswagen brand in this region is also in line with the strategic needs of NEW AUTO. Arno Antlitz summed up Volkswagen's success story in the United States.
Image from volkswagen group official social platform
In 2021, Volkswagen sold 17,000 ID.4s in the U.S., which Diess said "is the fastest growing pure electric car of its kind" and is also amassing orders for 21,000 units. As a result, the Volkswagen Group has gained an 8% share of electric vehicles in the US market, ranking second among the same type of companies.
In 2022, the Volkswagen Group will further enrich its portfolio of electric vehicles in the United States, launching eight models including Volkswagen, Audi, and Porsche brands. And the ID released last week. Buzz's new model, Diess described what the car meant to Volkswagen in the U.S. as "the key to re-establishing emotional resonance with consumers."
China is the most critical
Although Volkswagen Group's sales of pure electric vehicles in the United States have achieved a good result of second place in 2021, the development pace of the new energy vehicle market in the United States is far behind that of China and the United States.
The United States sold 608,000 new energy vehicles in 2021, an increase of more than 80% year-on-year, but the penetration rate was only 4.1%; in contrast, China and Europe, the former sold 352 new energy vehicles, ranking first in the world for seven consecutive years, of which the penetration rate of new energy passenger cars has reached 15%, and the latter has sold 2.77 million new energy vehicles in the whole year, with a penetration rate of more than 20%.
Therefore, compared with the US market, the key to the success or failure of Volkswagen Group's electrification transformation is the performance of China and Europe, and China is more critical.
Because in the European market, Volkswagen's electrification transformation has begun to bear fruit. Diess proudly said: "We have a 25% pure electric vehicle market share in Europe, which is twice the share of our fuel vehicle market. "But in China, volkswagen groups still have a lot of homework to do about electrification.
In 2021, volkswagen group delivered a total of 92,000 pure electric vehicles in China, although it is 4 times that of 2020, but compared with its 16% market share of fuel vehicles, Volkswagen group obviously needs to accelerate the pace of catching up.
As the world's largest new energy vehicle market, China is the most critical part of Volkswagen Group's emergence as the global leader in electric vehicles. The Volkswagen Group aims to become the global market leader in electric vehicles by 2025 at the latest, and the biggest competitor it faces is Tesla.
Tesla delivered a total of 936,200 new vehicles in 2021, of which the share of the Chinese market exceeded 34%; volkswagen group delivered a total of 450,000 pure electric vehicles in 2021, and the share of the Chinese market was just over 20%. Compared with its rivals, Volkswagen Group clearly has a broad room for growth in China.
Tesla's sales target for 2022 is to grow by 50% to 1.4 million units, while volkswagen group's pure electric vehicle sales target in 2022 is 7% to 8% of the group's total sales. Therefore, if the Volkswagen Group wants to surpass Tesla in 2025, the Chinese market is the key to success or failure.
The Volkswagen Group aims to double its pure electric vehicle sales in China this year. They've also done a lot of homework for Chinese users, with Daniela Cavallo, chairman of volkswagen's union, saying in an interview earlier this year: "Volkswagen must learn more about the Chinese market in order to gain a bigger market share." He stressed that Volkswagen must work together in China to better understand the needs of its customers, especially when it comes to software.
To this end, the Volkswagen Group has decided to set up a branch of the CARIAD division managed by Diess personally in China to provide an exclusive software experience for Chinese users.
Strengthen the competitive relationship with Tesla
Tesla's new plant in Brandenburg, Germany, is just a few hours' drive from Wolfsburg, the headquarters of the Volkswagen Group, and the European gigafactory recently received a green pass to allow production. This strengthens the competitive relationship between Tesla and Local German car companies.
As the best representative of the German automotive industry, the Volkswagen Group under the leadership of Diss has always regarded Tesla as an object to learn from, but also as its biggest competitor in the future.
Diess recently announced that the "Trinit Project" will produce a pure electric sedan with a futuristic design and the latest technology, as well as L4 level self-driving capabilities. The move is seen as benchmarking Tesla from the product level.
In other aspects, the Volkswagen Group also needs to fully benchmark Tesla.
Dies told reporters at the 2022 annual media briefing that the Volkswagen Group will spend 2 billion euros to build a brand new factory and a top research and development center next to the existing Wolfsburg plant to produce trinity, the first Volkswagen brand model based on the SSP platform, "This is also an important measure for us to compete with Tesla's factory in Brandenburg, and we also hope to get government support to ensure that we can complete on time and maintain a competitive advantage." Dees emphasized.
The Volkswagen Group also has to compare speed with Tesla in terms of self-built battery cell factories and self-built charging piles.
The Volkswagen Group invested an additional $620 million in Swedish battery maker Northvolt in 2021, acquiring a 20% stake in the cell maker. Volkswagen Group and Northvolt will establish a battery cell factory in the form of a joint venture to supply the Volkswagen Group's electric vehicles.
Dies said Northvolt's new plant in Sweden is under construction and will come on stream next year. Construction of a battery plant in Salzgitter, Germany, will also begin this summer. Diess also revealed that Volkswagen Group is selecting sites for battery factories nos. 3 and 4 in Spain and Eastern Europe. In China, Volkswagen Group has invested in Guoxuan Hi-Tech, which is also an important part of Volkswagen Group's strategy to build its own battery factory.
In terms of self-built charging piles, the Volkswagen Group is building a charging network covering Europe, the United States and China.
The Volkswagen Group plans to build 45,000 high-power charging terminals worldwide by 2025. At present, about 10,000 charging terminals have been put into use, and more facilities will be put into operation this year.
In Europe, the Group has formed a joint venture with The Italian National Electricity Company and is working with BP to launch the first high-power charging facilities. In China, the Group's joint venture, Chemies, has grown rapidly. In the United States, the group has developed a new expansion plan with Electrify America, which aims to build 10,000 high-power charging terminals by 2025.
From products to factories, to battery production and charging pile construction, Volkswagen Group must compete with Tesla in an all-round way.
Che Yun Summary:
In an uncertain year of 2021, the Volkswagen Group is perfect.
It's not just because its huge portfolio of brands excels – Audi has an operating margin of 10.5 percent, Bentley's operating margin of 13.7 percent, Porsche's 16.5 percent, and even a Mass brand of 3.3 percent.
Moreover, the annual delivery of the Taycan, a pure electric sports car, has surpassed that of the classic sports car 911 for the first time, which makes the independent listing of Porsche promising, and the brand will complete the independent listing in the fourth quarter of this year.
The Volkswagen Group's perfect year of 2021 is also reflected in the initial results of its "NEW AUTO" strategy - a significant increase in the delivery volume of pure electric vehicles, a strategy of software construction rising to the group level, and a third-party open strategy of the MEB platform taking effect,......
But behind this perfect earnings report are many challenges.
How to deal with China's electrification problem will be the biggest challenge for volkswagen group in 2022.
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