If there's one thing I can take away from this morning's VW Group annual results, it's that successful premium car manufacturing is a good way to make serious money.
It may be a crude measurement, but the Audi brand made £4.7 billion profit from selling 1.5 million vehicles and VW made £3.1bn by selling 5.7m vehicles. An even cruder quick calculation suggests Audi made an average of £3133 profit per car and VW just £543 profit per car.
Admittedly, VW is facing significant costs in rolling out the new MQB platform and new factories to put it to use. Things will improve for VW as it rolls out ever-more MQB-based models (a total of 40 VW Group cars will be based on the new platform), but it just shows that even a mainstream carmaker as healthy as VW is operating on very tight margins. Indeed, VW bosses admitted that over 50 per cent of VW Group profit is made by its premium brands.
The profit star of the VW show was Porsche. Although it only came under the VW umbrella last August, in the final five months of 2012 it made profits of £820m. With 2012 sales hitting around 140,000, my calculation is an average profit of £11,700 per car. That might get even better in 2014, because the new Macan compact SUV – sister car to the Audi Q5 – will be launched at the end of this year, and Porsche can surely add another 50,000 sales with such a timely model.
These figures make you realise why Peugeot-Citroën, Ford and Vauxhall/Opel bled away billions of euros last year. If you have to sell cars – especially those built in high-cost European factories – at any kind of discount on the brochure price, massive losses will surely follow.
Indeed, at the launch of the 2000-model Laguna, then-Renault boss Louis Schweitzer complained that Renault's biggest problem was that VW could achieve an average showroom price for a Golf that was £1500 higher than Renault could achieve for a Mégane. These problems still plague European mass-makers and it shows why the most reliable profits are increasingly being made by budget cars such as the Dacia and by premium brands.
I must admit to having great admiration for manufacturers that make up the global car industry, whether they make money or not. Crunching these figures reminds us of the extraordinary efforts made by the auto industry – investing huge sums, employing huge numbers of people and creating demand that runs from the steel works to the local dealership – all for, in the majority of cases, for the slimmest of profit margins, if not outright losses.
