Volkswagen Made More Money Selling Fewer Cars In 2021

Industry News / 5 Comments

It seems the People's Car company has put its past behind it.

The COVID-19 pandemic has resulted in a peculiar market trend that has seen luxury manufacturers such as Bentley and Rolls-Royce reach new financial records, particularly in the USA and China. It appears that despite the pandemic resulting in a financial crisis for many, some have benefited from some impressive monetary success.

The result of this is that demand for expensive cars has risen to an all-time high. Companies like Mercedes-Benz have taken note of this and hinted that it would be streamlining its offering to focus on a smaller offering of more premium products. Ferrari has also declared that it has no intention of creating more affordable models and would ramp up production of its more expensive curated cars. Another signifier of this trend is Volkswagen's latest financial report.

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In the recently revealed figures, VW reveals its operating profit, before special items, has increased by 451% from $550,000,000 in 2020 to $1.105 billion in 2021. This is despite 2021 reflecting an 8% reduction in deliveries from 5.3 million to 4.9 million units. Severe lock-down restrictions mean that production was hindered in 2020 but it was nothing compared to the supply chain crisis that seemingly has no end.

Volkswagen explains that strategy was key in maximizing income last year. Acknowledging the demand for more premium models, it dedicated more of its semiconductors to more aspirational models that are more likely to sell well. In doing so, it was able to record profits in both North and South America "for the first time in several years".

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Ralf Brandstatter, CEO of Volkswagen Passenger Cars says that thanks to the ongoing challenges, the brand has evolved to be "much more profitable, more crisis-resistant and more effective" compared to last year. With its Accelerate strategy, we can expect it to grow even more with the German auto giant having some big plans lined up.

By 2022, we can expect Volkswagen to increase the deliveries of its fully electric products including the to-be locally built Volkswagen ID.4 thanks to the increased flow of semiconductors. Operating profits may also maintain growth with the group eyeing a goal of a 6% return on sales in 2023. The situation in Ukraine does mean that these aspirations may not come to fruition.

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Looking at 2021's sales breakdown, there's no doubt that demand for electric cars from Volkswagen is increasing. In total, it was able to ship 369,000 units to customers across the world. This is a 77% uptake over 2020 when admittedly, not as many options were available. 106,000 of these were PHEVs while the remaining 263,000 were fully electric.

Creating more of a diverse range in its electrified offense are the aforementioned ID.4 and ID.5 which both have the option of a GTX performance trim. China's ID.6 also assisted in achieving a greater global market share and the arrival of the jovial ID. Buzz van is expected to increase EV profits even more throughout the coming years.

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