Volkswagen returns to profit on Chinese recovery

Volkswagen, the world’s largest carmaker by volume, returned to profit in the third quarter thanks to a recovery in sales in western Europe and China.

The German group, which owns 12 brands including Audi, Porsche and Seat, delivered 2.6m cars in the third quarter, just 1.1 per cent fewer than in the same period last year, although total sales in 2020 have fallen by more than a fifth.

After posting a loss of €1.4bn for the first six months of the year due to factory closures and widespread lockdowns, the group reported pre-tax profits of €3.6bn for the three months to the end of September.

For the first nine months of the year, VW’s pre-tax earnings stood at €2.3bn, down from €14.6bn at the same point in 2019.

The Wolfsburg-based group said that while it expected annual earnings to be “severely lower” than last year, the improving global market would enable it to post an operating profit despite a resurgence of Covid-19 cases.

“Depending on the future course of the pandemic, we are cautiously optimistic that we will be able to continue to stabilise our business in the remaining months of the year,” said Frank Witter, VW’s chief financial officer.

The company’s sales in western Europe grew by more than 10 per cent in September, compared with the same month last year, and by almost 1 per cent in China, its single largest market. 

Volkswagen’s results come after domestic rival Daimler reported that its net profits had increased by almost a fifth in the third quarter of the year, to almost €2.2bn, thanks to a strong rebound in Mercedes-Benz sales in China.

German premium brand BMW, which is due to report full quarterly figures next week, said it had more than €3bn in free cash flow in the period, vastly exceeding market expectations, thanks to “a faster recovery in several markets”.

On Wednesday, American carmaker Ford announced it had almost doubled its third-quarter profits, compared with 2019, achieving $3.6bn in earnings before interest and taxes, thanks in part to rising demand.

[optin-cat id=7010]