Core brand back in profit: VW wants to regain its old strength with a new strategy

Core brand back in profit
VW wants to maintain its old strength with a new strategy

The crisis year 2020 caused Volkswagen's sales to collapse. With the help of a new strategy, you want to get back to your old strengths as quickly as possible. In addition to uniform standards in the product range, the Wolfsburg-based company is increasingly relying on e-mobility. Meanwhile, the car division is fighting its way back into the black.

In the coming years, the Volkswagen Group wants to find its way back to its previous profitability as early as possible by expanding its platform strategy. The group is striving to further improve profitability and is pursuing the goal of returning as quickly as possible to the target corridor of 7 to 8 percent for the operating return on sales, according to Wolfsburg. In addition, the Dax group announced that the core brand VW passenger cars is back in the black after a strong second half of the year with a profit of 454 million euros.

VW St. 254.20

Last year, the return before interest and taxes on sales slumped to 4.8 percent due to the Corona crisis. This year management is aiming for 5.0 to 6.5 percent. Further cost reductions should also contribute to progress in the coming years. Hardware, software, battery technology and charging as well as mobility services from all Group brands are to be based on largely uniform technical principles in the future. In this way, economies of scale should be better used by Europe's largest car manufacturer and further cost savings between the brands should be possible.

"The good performance in the crisis year 2020 gives us tailwind for the acceleration of our transformation", said CEO Herbert Diess according to the announcement. The group also plans to deliver one million electrified vehicles this year. Last year, the group reported more than tripling of all-electric vehicles to just under 232,000 units, and an increase of 175 percent to over 190,000 units for plug-in hybrids. However, VW continues to reject a fixed date for the end of the combustion engine and justified this with regionally different types of electricity generation and regulatory framework conditions.

Success for core brand

Meanwhile, the Volkswagen core brand VW Passenger Cars made it into profitability last year with a strong second half of the year. Before interest, taxes and special items from the diesel affair, the group posted a profit of 454 million euros for the brand. For a long time it was unclear whether the Wolfsburg-based company would still be able to return to the black here.

After the first half of the year and the slump in the Corona crisis, the brand with the VW logo had amassed an operating loss of 1.5 billion euros. However, the management around brand boss Ralf Brandstätter had acted fiercely to make the turnaround. The core brand will present details on Wednesday.

In a year-on-year comparison, however, it becomes clear how business has suffered from Corona. The brand's sales fell by almost a fifth to 71.1 billion euros. Adjusted operating profit was 454 million euros, almost 90 percent below the previous year's figure of 3.8 billion euros. The corresponding return on sales fell from 4.3 to 0.6 percent.

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