Can VW meet financial targets amid falling car sales?

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Volkswagen Confident in Achieving Financial Targets Despite Lower Unit Sales Outlook

Volkswagen anticipates meeting its financial objectives for the year, even as it revises its unit sales forecast downwards. The company now expects vehicle deliveries to remain at the same level as 2018, a departure from earlier projections of modest growth. This adjustment follows a 1.5% decrease in unit sales observed in the year leading up to September, with approximately eight million vehicles sold during that period.
Global Market Contraction Affects Sales Volume

The automotive industry is experiencing a more pronounced contraction in global markets than initially predicted, driven by escalating trade wars and persistent Brexit uncertainties. These macroeconomic factors have particularly impacted the car sector, with Volkswagen's sales in Asia being affected by a 3% decline in the crucial Chinese market. Overall worldwide demand has softened by roughly 5%, leading Volkswagen to reduce its production plans by 900,000 vehicles for the current year.
Profitability Strengthened by SUV Segment and Reduced Scandal Costs

Despite the challenges in unit sales, Volkswagen has seen a significant increase in its financial performance. Net profits for the first nine months of the year grew by 19% to €11.2 billion (US$12.5 billion), while sales income rose by 6.9% to €186.6 billion. The operating profit saw a substantial increase of 24.5%, reaching €13.5 billion. This robust performance is partly attributed to the growth in the highly profitable SUV segment, which accounted for approximately one-third of the group's vehicle sales year-to-date and contributed to an operating margin of 7.9% in January-September. Furthermore, charges related to the "dieselgate" emissions scandal have decreased, falling from €2.4 billion in the first nine months of 2018 to €1.3 billion in the same period this year.
Revenue Growth and Profit Margin Targets Remain Achievable

Volkswagen remains optimistic about achieving its full-year financial targets, projecting an increase in revenue of up to 5% year-on-year. The company also aims to maintain its operating profit margin within the established range of 6.5% to 7.5%. The flagship Volkswagen brand, for instance, managed to increase its revenue by 5% while keeping sales volume stable. While the Audi subsidiary's performance was impacted by new emissions testing procedures, investments in new technologies, and rising labor costs, the overall group's financial trajectory indicates confidence in meeting its year-end financial goals.

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Can VW meet financial targets amid falling car sales?

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