Volkswagen reports strong first-half results, allowing investment in mobility, battery platforms and software as future profit pools

The Volkswagen Group posted robust operating results in the first half, enabling significant investment in future profit pools and new platforms. The Group continued to make great strategic progress in the second quarter, recording crucial developments in its technology platforms – mobility services, batteries and software.

“Despite unprecedented global challenges, Volkswagen demonstrated remarkable financial strength. The operating margin in the first half reflects strong product substance and proportionally higher sales in the premium segment. volume group has proven that it can deliver good results even in a difficult environment,” said CFO Arno Antlitz on the occasion of the presentation of quarterly figures.

Demand for BEV continued to grow rapidly in the second quarter, with order intake in Western Europe for the first half of 2022 being 40% above the level of the previous year. Despite supply bottlenecks, a temporary production halt in Europe and Covid-related lockdowns in China, 118,000 BEVs were delivered in the second quarter, representing a 6% share of total deliveries. In the first half, BEV deliveries increased by 27% to 217,000 vehicles. Volkswagen has added production capacity for the ID.4 in Emden, Chattanooga and for the ID. Buzz in Hannover in the second quarter to support the expected increase in global BEV production in the second half and beyond.

Despite global headwinds and supply chain issues, the Group demonstrated financial resilience in the second quarter. Revenue for the quarter amounted to 69.5 billion euros (3.3% increase compared to 2021). Operating income before exceptional items in the second quarter was €4.7 billion and included approximately €2.4 billion of negative derivative fair value effects excluding hedge accounting (mainly commodity hedging), an opposite effect compared to the first quarter. Before these book value losses, the underlying performance even improved on a good Q1 2022.

Operating income before exceptional items for the first half amounted to €13.2 billion, an increase of 16.1% compared to the first half of 2021. This was driven by the strong performance of the groups Premium and Sport brands, as well as improvements in the Volume group which achieved a 5.0% margin in the first half. , further underscoring the strength of Volkswagen’s business. In China, the monthly production pace picked up significantly towards the end of the second quarter, positioning the Group well for the rest of the year as Covid restrictions continue to ease. The region is the group’s second-largest BEV market (29% of Q1 and Q2 sales) and the biggest driver of growth in BEV deliveries, registering a more than three-fold increase from 2021 with 63,500 BEVs delivered in the first half of 2022.

The Group continued to prioritize investments in future BEV technology and software. R&D spending rose to 4.9 billion euros in the second quarter, accelerating Volkswagen’s progress to become a provider of software-driven mobility.

“The group’s strong operating profit and financial position allow for significant investment in future profit pools,” Antlitz said. “Volkswagen also made important strategic progress in the second quarter and significantly advanced the development of its battery, mobility services and software platforms.”

Make Volkswagen one of the leading mobility service companies

The acquisition of Europcar represents an important strategic step with which Volkswagen is expanding its mobility services business, tapping into a growing market where customer demand is expected to increase rapidly. The future profit pools are very promising. As a result, Volkswagen will be able to provide access to all of its customers through Europcar’s infrastructure, including major transfer points at airports, train stations and city centers, from which it can expand its services. of mobility.

Volkswagen plans to provide customers with all of their mobility needs from a single app, including carpooling, carpooling, car sharing, vehicle rentals and subscriptions.

New PowerCo paves way for expansion of battery production

PowerCo, based in Salzgitter, which was officially established in July, consolidates the global battery business, from raw materials to recycling.

At the same time, construction work began on the company’s first cell factory. This will provide a highly standardized model for Volkswagen’s global deployment of sustainable cell factories designed to secure supply and reduce battery costs for the Volkswagen Group.

CARIAD launches new software updates

CARIAD made significant progress in the second quarter, expanding its automated driving capabilities and providing customers with powerful updates that deliver a significantly improved level of automation and add new features such as automatic lane change with Travel Assist, automated parking and Plug & Charge.

CARIAD has also signed several agreements to secure high-performance hardware for the Group’s software platform and sustain the next generation of vehicles.

Outlook

Volkswagen Group confirms its outlook for 2022 after a strong first half as supply constraints ease. Wire harness supply has been successfully managed and has largely returned to normal levels. The Group expects the product mix to normalize in the second half, with the semiconductor situation improving in combination with a solid order book. A noticeable recovery in monthly sales towards the end of Q2 also bodes well for H2 sales.

However, it is still not possible to conclusively assess the specific effects of the war in Ukraine or the effects of the Covid-19 pandemic on the Volkswagen Group’s business, on the global economy and the growth of the industry. industry in fiscal year 2022. In Europe in particular, there are uncertainties regarding energy supply.

“Despite all the caution in the face of the volatile market environment and geopolitical risks, we are convinced that we can still accelerate the transformation of the Group”, concluded Chief Financial Officer Antlitz.

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