Fewer cars, more money – Despite crises: Volkswagen makes huge profit

However, only in e-cars do the combustion engines lag behind. And uncertainty surrounding supply chains, also due to the Russian war in Ukraine, is a growing concern for the people of Wolfsburg. The ongoing war has had a significant impact on exchange rates and price developments in commodity markets, VW said cautiously. In addition, the first effects on the supply chains are visible.

8.5 billion euros profit in three months
Earnings before interest and taxes, adjusted for exceptional items from the diesel affair, grew to 8.5 billion euros in the first three months, according to provisional figures. 3.5 billion euros alone came from the book value increase of security agreements. In this way, the group obtains prices and quantities of raw materials from suppliers – and the balance sheet value of the contracts increases if prices fluctuate more, as happened recently. As a rule, VW cannot convert this increase in the value of the contracts into cash on the financial market, because the Wolfsburg-based company is dependent on the delivery of the raw materials agreed therein on the corresponding terms.

But even without the effects of the hedging contracts, an operating profit of about 5 billion euros would have been booked – just over a year ago at 4.8 billion euros, when certain hedging agreements had already pimped the numbers.

Fewer cars sold – more profit
The situation with the missing semiconductor components continues to have a significant impact on production. In the first quarter, VW delivered only 1.9 million vehicles worldwide, a good fifth less than in the same period last year. In the home market of Western Europe, deliveries fell by almost 15 percent. In China there was a minus of 23.9 percent. VW is the market leader in the world’s largest car market, where the group makes approximately 40 percent of all group deliveries.

Volkswagen cited the pandemic restrictions imposed by China’s zero-covid strategy as one of the reasons for China’s poor performance. The corona wave is currently impacting regions such as northeastern Jilin province, the Yangtze River Delta or provinces such as Shandong and Hebei, where Volkswagen typically sells a lot, the statement said. The group also had to suspend operations at factories in Shanghai and Changchun in northeast China due to the lockdowns.

Car prices are going up
The scarce supply of new cars as a result of the chip crisis has long led to long delivery times in the market for private and business customers with strong demand. This causes prices to rise, both for new and used cars. VW benefits from this not only in the sale of new cars, but also in the remarketing of lease yields.

Cheap series are suspended
In addition, VW is trying to prioritize the more lucrative Porsche and Audi cars with available chips to bolster profits. At Porsche, the drop in deliveries in the first quarter was only just under 5 percent, at Audi there were almost 17 percent less sales. Deliveries of the core VW passenger car brand, on the other hand, fell by more than a quarter.

The electric cars that CEO Herbert Diess plans for VW in the future are also preferably equipped with the scarce semiconductors. Their sales rose 65 percent from January to March to 99,100 all-electric cars. In China, where the advance of battery cars has been bumpy for a long time, VW delivered 28,800 electric cars, four times as many as a year ago.