Pandemic hits VW sales, profits drop by 81.4%

KUALA LUMPUR: Like most of the other sectors, the automotive industry is in bad shape too. Around the globe, carmakers are reporting a drop in production and sales in Q1 of 2020. And like many, even VW is not speared from ill effects of the pandemic.

In its recent financial year report, VW announced a plunge in its sales and operating profits in Q1 of 2020. As per the German automaker, it is mainly due to the temporary suspension of dealerships and the production of parts and vehicles.

Frank Witter, Member of the Group Board of Management accountable for IT and Finance, said, “The global COVID-19 pandemic substantially impacted our business in the first quarter. We’ve taken numerous countermeasures to cut costs and ensure liquidity, and we continue to be robustly positioned financially. The gradual restart, also of our factories outside of China, has begun. The health of our employees and suppliers remains a clear priority here.”

Based on VWs report, the company’s operating profit for Q1 of 2020 dropped by 81.4%, i.e., from EUR 4.8 billion last year to 900 million Euros this year. As for Q1 earning before tax, it is EUR 700 billion, while last year, it was EUR 4.1 billion. Operating return on sales stands at 6.1%. As of March 2020, Volkswagen’s new liquidity stands at EUR 17.8 billion.

The Q1 2020 figures are down due to the pandemic, and the same situation is expected to follow in Q2 as well. Despite all this, VW foresees operating profit for 2020 to remain positive. However, it’ll be lower than the previous year figure.

Also, as European governments are easing the lockdown restrictions, VW has gradually resumed operations, and it won’t be long before outlets reopen too.

Also Read: Daimler Q1 2020 global sales figure out, indicates a drop