Volkswagen sales down 8% in 2021 but profit up 451%

Volkswagen sold 4.9 million vehicles in 2021, 8% fewer vehicles than 2020 but still increased operating profit by a significant 451% to 2.5 billion Euros. Sales revenue rose by 7% to 76.1 billion Euros and the firm achieved a return on sales of 3.3%, an increase over the 0.6% of 2020. While the reduced sales volume is a result of the global semiconductor shortage, the German company's positive financial results were achieved by selling “higher-equipped cars and allocating semiconductors in such a way to increase margins,” according to finance boss Alexander Seitz. Its businesses in North America and South America made a profit for the first time in a number of years, too. Seitz, talking at VW's annual press conference, also flagged reduced marketing spend and restrictive hiring programmes - which means Volkswagen's employee headcount has stayed the same - as two more cost-reduction measures. The firm wouldn't share sales volume projections for 2022, citing the turbulence of the market from both the semiconductor shortage and other supply issues created by the Russian invasion of Ukraine. However, Seitz said he expects the semiconductor shortage to significantly ease in the second half of the year. Sales board member Klaus Zellmer added: “The plan is ambitious and our order book is full - we would love to build as many cars as we can but given current supply shortages I’m not going to give you a number here. The production network is really volatile. Obviously we want to grow significantly versus our good sales figures in 2021. The brand’s target to return 6% on sales in 2023 is still on course, he said. While the conference focused on results rather than new models, VW CEO Ralf Brandstatter confirmed that a production version of the ID Vizzion would be shown at the Beijing motor show next month, ahead of sales in China starting next year. He also referenced the excellent reception received by the Volkswagen ID Life concept at last year's Frankfurt motor show, stating that the entry-level, electric model was on course for 2025. Volkswagen EV sales increase by 73% Volkswagen sold 369,000 electrified vehicles last year, a rise of 73% on the year before. Some 106,000 were plug-in hybrids and 263,000 were fully electric, meaning sales of zero-emissions car doubled over 2021. These sales were predominantly of the Volkswagen ID 3 and Volkswagen ID 4 but also the new Volkswagen ID 5 and, in China, the ID 6. Talking about his highlights of 2021, Brandstätter said: “This past year was a challenging one for Volkswagen, and this isn’t going to change in 2022. “A special moment was when we hit this button to activate the first over-the-air update for our ID Models which worked really well. It was a special moment for the team and it certainly was a highlight. “VW is transforming into a tech company. We are now reaping the benefits from the efforts of the last year. There has been 100,000 over-the-air updates on ID models. In Europe, OTA updates have been successful, Particularly popular are the sat nav function and full beam assist. He continued: “We also have new business cases in Germany, for example, our Auto Abo subscription service which has been met with resounding interest. Users are 10 years younger than our traditional customers so we are tapping into new customer groups.” "We’re also going to build a new production facility with new engineering concepts.” Brandstatter said that the new Trinity production facility will “set new standards, make fewer variants, use better components and introduce new logistic concepts”, all of which will reduce production time per vehicle to 10 hours. He added that it has also overhauled its R&D approach, decoupling the development of software and hardware. As a result, models are developed in 40 months rather than 54 months, he claimed. The impact of the war in Ukraine Brandstatter said there are “significant consequences” for the business of the war in Ukraine but added that that ‘“doesn’t matter if you bear in mind how people are suffering” in the country. “Our thoughts are with the people of Ukraine. All we can hope is to return to peace in Europe.” He added: “We already feel there is a direct impact on supply situation. In Zwickau, we can not build vehicles at the moment. We can compensate that with regional footprint in China, North and South America and some plants in southern Europe are less affected. This is where our global network really comes in to help compensate. But we need to stabilise our business quickly.” Volkswagen procurement boss Murat Aksel added: “We have two main regions - Eastern Europe including Ukraine, and North Africa - which supply wiring harnesses. We are developing a dual track strategy. We of course want lasting durable peace in that region. And we support the suppliers and hope they can start production again. But our company needs to take precautions in case this war should continue.”