Under the dual pressure of the epidemic and the lack of core, 2021 has become long and painful, but the operating profit of the Volkswagen Group has achieved "reverse growth".
Text/"Autobot" Wu
The original "hard" 2021 was changed from "defense" to "counter-attack" by Volkswagen.
In 2021, the life of the Volkswagen Group is not good: the shortage of semiconductor supply restricts production capacity, the legal expenditure of the "emission gate" consumes profits, and the cost savings slow down some potential businesses... But the results are also obvious, with operating profits of 20 billion euros and a cash flow of 8.6 billion euros already on par with mercedes-Benz Group.
Dr. Dies, Chairman of the Board of Directors of the Volkswagen Group
Not only because of its robust business model, but also because the Volkswagen Group has mastered the secret to reducing the negative impact of the crisis. However, the future layout of science and technology and electrification transformation are like "gold-devouring beasts", and the next few years will still be like walking on thin ice.
Sales fell and profits rose
Under the dual pressure of the epidemic and the lack of cores, 2021 has become long and painful, but the operating profit of the Volkswagen Group has achieved "reverse growth".
The Volkswagen Group sold 8.576 million vehicles in 2021, down 6.3% from 2020. At the same time, its financial performance was remarkable: sales revenue increased by 12.3% to 250.2 billion euros, and operating profit before special items increased by 88.8% from 2020 to 20.026 billion euros.
If you compare the 2019 data before the outbreak of the epidemic, the vehicle delivery decreased by 21.68% (compared with 2019) and the operating profit increased by 3.63% (compared with 2019). This means that by allocating chips to highly profitable models and reducing sales incentives, the Volkswagen Group's profitability is back on track and its overall operations are back on track.
If you look closely, you can see that there are differences in the data on the "sales volume" of the whole vehicle. Deliveries to customers were 8.882 million units, down 4.5% year-on-year, and sales (orders placed by customers) were 8.576 million units, down 6.3% year-on-year. There was a scissors difference between the order and the delivery.
Annual orders are less than annual deliveries, which is a normal phenomenon, 2020 orders, by 2021 to complete delivery; and the scissors gap expanded - 148,000 units in 2020, expanded to 306,000 units in 2021, indicating that the impact of chip supply constraints on production capacity is intensifying, and customer patience will also be consumed with scissors differences. This is not good news for any brand.
When interpreting the financial report, Dr. Diess, chairman of the board of directors of the group, particularly stressed that the supply of chips will improve steadily this year.
Positive profits and negative cash flows
In addition to sales and revenue, there are two interesting figures in the earnings report that deserve attention.
The first is profit, excluding special items of operating profit of 20.026 billion euros, an increase of 88.8% over 2020 and 3.76% from 2019; the second is cash flow, the automotive sector generated a net cash flow of 8.6 billion euros, an increase of 35% year-on-year, a decrease of 20.37% compared with 2019.
There are many reasons for "increased profits and decreased cash flows", such as easing credit, impairment charges, and repayment of principal and interest, but for the Volkswagen Group at this stage, it is likely to be due to the amortization caused by recent large-scale investments.
In December 2021, Dr. Diess unveiled ambitious expansion plans: the Volkswagen Group will spend €89 billion over the next five years to invest in future technologies, of which €52 billion will be spent on electric mobility, €8 billion for hybrid technology, and another €30 billion for digitalization and autonomous driving.
In the Volkswagen Group's investment plan announced in November 2020, the investment in future technologies amounted to 73 billion euros. The same is the investment in "future technology", from 73 billion euros in 2020 to 89 billion euros in 2021, an additional 16 billion euros, all of which will be used for electrification.
In addition, since 2019, it has jointly carried out battery research and development with Beifu, and then built a new Northvolt Zwei plant in Salzgitter, Germany... All of them are invested to promote electrification transformation, which will directly affect cash flow performance.
Electrification, China Front
Volkswagen has significantly increased its investment in electrification, not a blind leap forward. The Porsche Taycan delivered 41,000 units in 2021, surpassing the best-selling Porsche 911 for the first time. This "reversal" means that the electrification transformation can be achieved at a profit margin of 16.5%, which strengthens the determination of the Volkswagen Group to continue to promote the electrification transformation.
In 2021, volkswagen group electric vehicle deliveries have increased significantly, with 452,900 pure electric vehicles delivered to customers in 2021, an increase of 96% over 2020; the US market ranks second with a share of 7.5%, the Chinese market delivers 92,700 BEVs, and the market share of electric vehicles in the European market is twice that of fuel vehicles – one Volkswagen is manufactured for every 4 pure electric vehicles.
Arno Antlitz, Chief Financial Officer of Volkswagen Group, stressed that the construction and investment of the entire battery value chain are also advancing step by step.
Despite the rapid development of electrification layout in Europe, in the New Auto strategy, China's industrial chain is still the core of the electrification transformation.
In 2020, Volkswagen Group launched the upgrading of China's supply chain and manufacturing system, and the purpose and direction are quite clear. In May 2020, it increased its stake in JAC Volkswagen, an electric vehicle joint venture, to 75%; in October of the same year, Audi and FAW established a new energy joint venture to pave the way for the PPE platform to enter China and produce pure electric large coupes and SUVs; in December 2021, Volkswagen China became the largest shareholder of Guoxuan Hi-Tech with a share ratio of 26.47%, locking in lithium iron phosphate technology, and the competition target was directed at Tesla.
It is certain that as the weight of "double integral" increases year by year, the concept of green development becomes a common practice, and the charging and replacement facilities continue to mature, the strategic significance of the Chinese market for electrification will become more prominent.
In today's Chinese market, the Volkswagen Group has a market share of 16%, and the Volkswagen brand alone has an 11% market share. If in the electric vehicle market, this proportion can continue or even double as the European market, then Volkswagen will not only achieve the success of industrial manufacturing, but also gain the special favor of investors. This is the key to Volkswagen's willingness to continuously deploy in China, and it is also the fundamental reason why Dr. Dies has made the electric transformation the core of New Auto. 【Copyright Notice】This article is the original manuscript of Automan Media, and may not be reproduced without authorization.