The Volkswagen Brand has had a significantly better start to 2017 than it did the two respective years before: Sales of around 860,000 vehicles resulted in sales revenue totaling €19 billion. The operating result amounts to €900 million. Furthermore, the first efficiency measures are paying off. "These financial figures are a clear indication that we're on the right track," as Board Member for Finances, Arno Antlitz, said at the Annual Session last Friday. Antlitz gave three reasons for the good figures: To start with, a number of markets have rallied significantly. This allowed sales in Western Europe and Russia to be increased, with the markets in North America and South America also demonstrating growth. Currency effects also had a positive impact. When it comes to vehicle models, the full market availability of the Tiguan also had positive effects, according to Antlitz. "The new model was very well received and resulted in significant positive contributions to both sales and earnings."
The figures – above all, unit sales and revenue – are only comparable with the previous year's figures to a limited extent. The reason for this is the new reporting structure now being used by the Volkswagen Brand. The previous reporting structure accounted for the Brand's own core business, this being development, production and sales of vehicles made by the Volkswagen Brand. "Of course, this will remain so in the future," as Antlitz clarified.
Along with this, however, a substantial share of unit sales came from the sale of vehicles made by other Group brands. Sales revenue from multi-brand importers with Audi, Seat and Škoda vehicles in countries such as the UK, France and India has been reported in the Volkswagen Brand up until now. The activities of some Group service companies were also attributed to the Brand. This was the case with Volkswagen Group Logistics, for example. "These activities are only partly related to the performance of our own Brand," as Antlitz explained.
This is the reason why we have split off the relevant companies from the Volkswagen Passenger Cars brand. The corresponding revenues will be consolidated on the Group level in the future.
"The structural adjustment depicted improves transparency, enables better comparability of the financial indicators with our competitors, and supports management focus on the Brand's core activities," as Antlitz stated, before elaborating on what the structural realignment will mean for the Brand's key financial indicators.
In 2016, the Volkswagen Brand reported revenue of €106 billion. Under the new reporting structure – and therefore without the aforementioned, non-Brand related activities – the Brand would have reporting sales revenue of around €74 billion in 2016. Realignment would have also resulted in a contraction of the figures at the operating result level. Instead of the €1.9 billion reported, the operating result totaled around €1.6 billion. At 2.1%, the operating return on sales would therefore have been 0.3 percentage points higher than the figure reported.
For 2017 as a whole, the Member for Finances forecast that the positive growth in business recorded in the first quarter will continue. Sales revenue should be up to ten percent more than the comparable figure for the previous year, and operating return on sales is expected to be at the upper end of the bandwidth that has been communicated of 2.5 to 3.5 percent. "The good first quarter gives us a tailwind for the coming months," as Brand Chairman Diess said. However, this will not make 2017 a sure-fire success, as the Brand Chairman warned, and named significant risks.
The market environment will remain challenging. Ongoing developments in North and South America in particular remain uncertain.
There are political risks in important markets such as the UK and Turkey.
Foreign exchange rates remain another element of uncertainty.
There are a number of start-ups pending that all need to be implemented without difficulties.
The effects of the diesel crisis continue to be felt.