The earnings report time | Volkswagen Group was surrounded by russo-Ukrainian war concerns in the financial report week, and China became one of the "safe havens"

From March 15 to March 18, Volkswagen Group ushered in the annual financial report release cycle. In the four global online conferences (Volkswagen Group, Volkswagen Brand, Audi Brand, Porsche Brand) held in succession, although the earnings reports of Volkswagen Group and its three major brands were eye-catching enough, revenue hit new highs. However, whether it is a high-level speech or a media Q&A session afterwards, how to deal with the impact of the Russo-Ukrainian War has become the most frequent content.

Herbert Diess, president of the Volkswagen Group, sounded the alarm at the beginning of the Russo-Ukrainian war that the automotive industry would be deeply affected, and at the Volkswagen Group's press conference on March 15, he once again stressed that the impact of the Russo-Ukrainian war on the automotive industry and the European economy may be more serious than the epidemic.

Unable to obtain a wire system produced in Ukraine, Volkswagen had to suspend production at its plants in Zwickau and Dresden in eastern Germany in early March, which produce electric vehicles based on Volkswagen's MEB platform. At the Zwickau plant, the main electric vehicle production site is responsible for the production of electric models such as the Volkswagen ID.3, ID.4, Audi Q4 e-tron, Skoda Enyaq and SITT Cupra El-Born.

Volkswagen said that because most of the cable harness systems for electric vehicles rely on suppliers in western Ukraine, the current plants in Zwickau, Wolfsburg, Wolfsburg, Emden and other factories have been shut down or reduced. According to the plan, Wolfsburg will resume production next Monday, and other plants will resume production in late March or early April.

It is reported that Volkswagen Group's current wiring harness suppliers are mainly distributed in Eastern Europe and North Africa, including Tunisia, Morocco and other countries. To this end, Volkswagen is currently preparing for two things: one is to continue to maintain cooperation with some suppliers in places that Ukraine can still buy now, "they can still supply some high-quality goods on time, so we will not give them up".

At the same time, we must also be prepared that the war will continue, "we will not delay (delivery), but will use different places as a backup source (for the supply of parts)," Volkswagen said, adding that another is to ensure that there are enough alternative sources of wiring harnesses by increasing production capacity by producers outside Ukraine. This plan is underway and it is reported that the Romanian plant has increased production.

The shortage of wiring harness supply is only one aspect, on the other hand, Volkswagen announced after the outbreak of the war that it would stop delivering cars to the Russian market, while suspending production in Russia, which involved a production capacity of 150,000.

Volkswagen said that out of concern about the situation in Europe, it is currently using global resources to achieve a new balance. This also needs to take into account the chip shortage that Europe is currently facing at the same time. "We are mainly using Volkswagen's production network and trying to move it [the affected capacity] step by step to North America, South America, and China so that we can make up for these shortages." The relevant person in charge of Volkswagen said that there is currently a special team implementing the new production plan.

At the cost of halting Russian operations, the bigger crisis facing Volkswagen is sanctions from Russia. As part of the counter-sanctions measures, Russia has listed foreign companies that may be nationalized, including 59 companies that have stopped operating in Russia or withdrawn from the Russian market, according to Russia's "Izvestia" reported on March 10. Volkswagen, Porsche and Toyota appear in the list. The report said that Russia will take all measures to make the offending companies suffer significant losses.

In response to this situation, Volkswagen responded during the annual meeting, "There is no specific decision reached at present, which is indeed the public's concern." ”

Volkswagen said that although Volkswagen decided to stop production activities in Russia for a period of time and no longer supply to Russia due to the war between Russia and Ukraine, Volkswagen will continue to pay 80% of the salaries of local employees in Russia. We are also observing the relevant regulations and legislation in Russia. ”

"Audi has stopped all supplies to Russia, the situation needs to be further developed, and at the moment we are trying to do everything within our capabilities to help Ukraine." On March 17, at the 2021 financial report of the Audi brand, Dusman, chairman of the board of management of Audi Automobile AG, also first expressed concern about the War between Russia and Ukraine.

Dusman said that Audi is currently working intensively through a task force to deal with supply bottlenecks and ensure supply in the best way.

At the Press Conference of Porsche's annual financial report held on March 18, the Russian-Ukrainian issue also became the main topic of elaboration. Obomu, Chairman of the Executive Board of Porsche Global, said: "We have some Tier 1 suppliers right in Ukraine. The supply chain at Porsche factories has been affected to some extent, which means that in some cases production cannot be carried out as scheduled. ”

Obermu revealed that most of Porsche's Ukrainian suppliers are in the western region and have not been very seriously affected so far. "On the one hand, we try to keep production as normal as possible. On the other hand, we are also thinking about what alternatives there are to move the production of some parts to other regions, but it is too early to speculate on this. ”

A task force has also been set up within Porsche to continuously assess the impact on its business. To help people affected by the conflict in Ukraine, Porsche Worldwide has donated 1 million euros.

The impact of the Russian-Ukrainian issue is more clearly reflected in the Volkswagen Group's evaluation of its performance in 2022 and beyond. During the annual meeting, the Volkswagen Group announced its outlook for 2022 as "expected to increase deliveries by 5% to 10% and return on operating sales to 7.0% to 8.5%." But at the same time, it is reminded that "the actual performance of the Group's business will depend on how the situation in Ukraine develops further, in particular its impact on the global economy and the Group's supply chain." ”

The Volkswagen brand also expects an increase in operating profit, sales revenue and return on operating sales in 2022. "Our goal is to achieve a 6% return on operating sales by 2023 and set the next steps towards achieving that goal in 2022." Alexander Seitz, chief financial officer of the Volkswagen brand, said.

He also stressed, "Under normal circumstances, we have every reason to look forward to 2022." Because we achieved strong financial results in 2021, the epidemic is fading, and the supply of chips will improve steadily this year. But the conflict in Ukraine gives us some uncertainty about our current outlook. ”

Audi chose not to assess the impact of the Russo-Ukrainian war for the time being, CEO Dusman said, "Of course we should look at the consequences for our company, the supply chain is seriously disrupted, we are trying to mitigate these effects as much as possible, but now to assess what [this war] means for this year." It's still too early. ”

Porsche said that although the world is facing serious political and economic challenges, Porsche will still firmly adhere to the long-term goal of "achieving at least 15% annual return on sales".

However, Obermu stressed that "the global geopolitical crisis is a very big problem, which has had a huge impact on the automotive industry and has forced us to change some of the structure of the company." ”

For the Volkswagen Group, which sells an average of more than 700,000 units a month, it is currently at the most critical moment in its supply chain, and Volkswagen has just recently stopped orders for several plug-in hybrid models, including the Golf, Passat and Tiguan under the Volkswagen brand, due to the inability to meet the supply of chips.

Volkswagen Group said it is currently unable to make a definitive assessment of the extent to which the Russo-Ukrainian war will affect the growth of the global economy and automotive industry in fiscal year 2022. However, at present, revising the prospects of enterprises has become an inevitable choice.

Due to the risk of sanctions on trade with Russia, BMW, Mercedes-Benz, General Motors, Volvo, Toyota and other car companies have said that they have suspended the delivery of cars to the Russian market, and some car companies have stopped local production and begun to consider divestment. According to a new round of EU sanctions that was disclosed a week ago, the EU also plans to ban the export of luxury cars to Russia that sell for more than 50,000 euros (about 350,000 yuan).

At the BMW 2021 annual financial report press conference held on March 16, the Russian-Ukrainian issue was also mentioned as a destabilizing factor. BMW said it can still source some parts from western Ukraine. On the other hand, they are also trying to work with suppliers in other parts of the world to find alternatives to maintain normal production of new cars.

But BMW also warned that there could be further production disruptions in the coming weeks. The automaker had expected to deliver more new cars in 2022, but now they've lowered their sales forecast to "level with 2021."

BMW Group said the Conflict between Russia and Ukraine has made it difficult for the group to give accurate guidance on its 2022 results and to incorporate any potential long-term impact into its forecasts.

In fact, in the case of chip supply shortages that are expected to be alleviated in the second half of the year, the uncertainty and unpredictability of the Russo-Ukrainian war are becoming the biggest crisis in the global automotive industry. This means that the three-year-old supply chain crisis in the automotive industry will be exacerbated.

At the same time, the influence of political factors on the automotive industry and enterprise development is deepening, and the potential impact and differences brought about by the Russo-Ukrainian war are also occurring within multinational car companies that advocate pluralistic values.

As far as the Chinese market is concerned, from the perspective of Volkswagen's response plan, the transfer of production capacity of European and American car companies to China and the trend of increasing investment in China are considered to be further accelerated.