Volkswagen benefits from bumper recovery in car sales

Volkswagen is continuing to benefit from the bumper recovery in car sales, forecasting that it will make around €11bn in operating profits for the first six months of the year.

The preliminary figure exceeds the €10.6bn made by the carmaker in 2020, and the €9.6bn from the first half of 2019.

In a short statement, VW, the world’s second-largest carmaker by volume, also reported net cash flow of around €10bn for the six months to the end of June.

But the Wolfsburg-based company, which also owns brands including Audi, Porsche and Seat, warned that the “bottleneck in semiconductors has shifted and will . . . impact us in [the second half of the year]”.

Earlier this week, the German car lobby, VDA, said that it expected 400,000 fewer cars to be produced in the country in 2021, largely because of the chip shortage. Volkswagen has said it expects its own shortfall to be a “six-digit number”.

In response to the global shortage of the crucial components, VW prioritised the production of high-margin premium models, a spokesman told the Financial Times, which helped cushion the financial blow.

A rise in demand for used cars also boosted profits at the company’s financial services arm, he added, which offers loans to customers.

“One quarter after the other, these guys are really doing a great job,” said Arndt Ellinghorst, an analyst at Bernstein.

“It’s very refreshing to see such huge numbers from a traditional manufacturer,” he added. “It’s certainly harder earned than some of the Spac cash flying around these days”.

VW’s figures come despite a slowdown in the car sales recovery in China, its single biggest market. The group has also registered disappointing sales in the country of its dedicated electric vehicles, the ID. 3 and ID. 4, as domestic brands eat up more of the local market share.

But the company benefited from a higher proportion of deliveries in Europe, where margins are higher than other regions, and strong sales in the US.

Last month, VW revealed that deliveries between January and May had increased by 33 per cent worldwide, compared to the previous year. Truck brands MAN and Scania registered the strongest growth, with sales increasing by 68 and 61 per cent respectively.

VW’s shares rose by more than 3 per cent on the latest forecast. The company is due to publish a full financial report on the first half of the year on July 29.