Back into profit a year earlier than budgeted
With a strong financial turn-around of over half a billion euros, Volkswagen Commercial Vehicles (VWCV) is back into the black – a year earlier than budgeted. With a profit of 73 million euros, the brand is now again showing a clearly positive operating result (following a loss of 454 million euros in 2020). The business figures were presented today during the digital annual press conference by the Chairman of the Brand Management Board, Carsten Intra, and the Management Board Member for Finance, Michael Obrowski. The impact of the coronavirus pandemic, especially the difficulties with the supply of semi-conductors, led last year at VWCV as elsewhere to periods of production downtime and to fewer vehicles being shipped. At the same time, the light commercial vehicles manufacturer continued its transformation apace last year. The conversion of the main plant in Hanover into a high-technology site is systematically progressing. All the measures taken contributed to the enhanced GRIP 2030 corporate strategy, which VWCV made public for the first time at the press conference.
Volkswagen Commercial Vehicles delivered 359,500 vehicles to customers last year – in the year before it was 371,000. Carsten Intra, Chairman the Management Board, was nevertheless satisfied with the sales performance, especially with the high number of orders taken, which was for around 100,000 vehicles more than units delivered: “The strong demand for our products shows the strength of the brand and the customers’ great interest in the products we offer.”
Looking ahead to the coming year, Intra made reference to the ongoing uncertainties, above all caused by the effects of the war in Ukraine: “We are all moved by the suffering of the people. Many of our employees want to help: be it by giving money, through donations in kind or by personally getting involved”, said Carsten Intra. The VWCV plants have been directly affected by the loss of some central suppliers. That is leading to renewed, previously unforeseeable stoppages in production.
Operating profit positive again in 2021
Despite the challenging situation, Volkswagen Commercial Vehicles returned to the black in 2021, a year earlier than originally budgeted. The operating result was a profit of 73 million euros, following a loss of 454 million euros the previous year. VWCV thus improved its bottom line by 527 million euros in total. Commenting on this, Michael Obrowski, Management Board Member for Finance, said: “There were several logical consequences from the market situation in 2021 that had a positive influence on our result: these included fewer sales support and very strong used car business once again.”
Obrowski continued: “Another key factor in the positive result was the high expenditure discipline as well as cost optimisation in our brand. They made the impressive turnaround possible ahead of schedule.” Over and above that, appreciably reduced R&D costs contributed to the positive outcome. In 2021, they amounted to 602 million euros (prior year: 1,031 million euros). VWCV benefited in this respect from the great synergies with Volkswagen Development in Wolfsburg and from utilising platform solutions like MQB and MEB for the latest commercial vehicle models.
Product range extended: new Multivan and ID. Buzz, new Amarok to follow
Volkswagen Commercial Vehicles is in future broadening out the Bulli range into three pillars: the Multivan, T6.1 and new ID. Buzz model lines. To this end the company already introduced a completely new generation of the Multivan in June 2021. With more driving comfort, premium elements from passenger cars and even more multi-functionality. The popular T6.1 remains both the specialist for commercial use and for now also the basis of the very successful California camper. In the shape of the recently unveiled ID. Buzz lifestyle MPV and the ID. Buzz Cargo urban van, VWCV has now additionally presented two all-electric models. Carsten Intra: “For the me the vehicle represents the mobility of tomorrow. The ID. Buzz transfers seven decades of Bulli know-how and the design of an icon into the era of electric mobility.” And another product launch is already scheduled for this summer: the new Amarok from the cooperation with Ford will then be making its debut.
Final preparations are being made at the Hanover plant for full production of the new ID. Buzz. These include training up over 5,000 employees in the making of electric vehicles. Around 60 per cent of the workers have completed the training course. The remaining staff are currently undertaking training that will be completed by the time production begins. In parallel with this, some initial conversion work for future all-electric premium Audi and Bentley vehicles has already begun. A new production hall is being erected for this in the heart of the plant. Despite the difficult circumstances around semi-conductor supply, the production start-ups of the Caddy Maxi and compact Caddy California camper have begun at the Poznań plant (Poland).
Digitalisation progressing, new services successful
With partner Argo AI, Volkswagen Commercial Vehicles has realised important milestones on the path to autonomous driving. Argo AI has been running tests of autonomous driving in Munich using the ID. Buzz AD prototypes since September. While VWCV and Argo AI are developing autonomous driving and the self-driving system, MOIA is the partner for an autonomous mobility service. The VWCV subsidiary has extensive experience in the area of mobility services provision, known as ‘Mobility as a Service’ (MaaS). Within a very short time, MOIA has built up Europe’s largest, all-electric ridepooling service with drivers and transported millions of passengers. MOIA is due to be the first user of the ID. Buzz AD as of 2025 in Hamburg.
A year ago, Volkswagen Commercial Vehicles introduced the start-up Cito as part of the company’s activities in the field of TaaS (Transport as a Service). Cito’s market launch followed as planned last summer. The transport solution for business customers concentrates on the market of time-critical transportation. There are now over 200 partners registered on the platform, and Cito’s turnover is showing double-digit growth every month, which is also as planned. Currently Cito offers direct routes within Germany and to other European countries.
GRIP 2030 sets goal through to the end of the decade
All the measures taken last year are central building blocks of VWCV’s corporate strategy. During the press conference, Carsten Intra presented for the first time the details of the further developed GRIP 2030 strategy. It describes the company’s vision through to the end of the decade. “By 2030, more than 55 per cent of our vehicles in Europe will be battery-electric vehicles powered by ‘green’ electricity.” In developing the AD technology, VWCV is also contributing an integral component to the Volkswagen Group’s NEW AUTO strategy. VWCV is thus on the way to becoming an agile, performance-oriented, digital business.
With the traditional car business (“Car Business”), Volkswagen Commercial Vehicles aims to generate an annual EBIT – i.e. earnings before interest and taxes – of more than one billion euros in 2030, with a return on sales of more than five per cent and a return on investment of over 20 per cent. The ‘AD/MaaS/TaaS’ business unit, which covers the activities associated with autonomous driving and the MaaS/TaaS services, will be selling services in more than 50 cities worldwide. Calculated across all services, the return on sales will be over ten per cent. “The objectives that we want to achieve with GRIP 2030 are ambitious, but they are also realistic”, says Carsten Intra in summary. “With our products and services we will decisively shape the mobility of the future.”
SOURCE: Volkswagen Commercial Vehicles
Keyword: Strong turnaround: Volkswagen Commercial Vehicles ends 2021 with positive result