VW has revealed its financial performance for 2015
New CEO Mattias Müller delivered the results in Germany today
Former boss Martin Winterkorn is to receive a £7m payout
The news - made at the announcement of the VW Group’s results for 2015 - came as new VW chief executive Matthias Müller admitted that the firm is behind schedule with enacting fixes to cars affected by the emissions scandal. However, he remains optimistic that the company will hit its target of having offered all customers “a solution that doesn’t affect performance in any way” by the end of this year.
The VW Group also reported its first loss since 1993, posting a £1.1bn deficit after setting aside a £12.2bn provision for paying for the emissions scandal. However despite a sales drop of 2% year-on-year, it reported sales revenues were 5.4% up and that the Group’s operating profit was level year-on-year at £9.65bn.
“Our key figures for 2015 demonstrate that VW's core business is in good shape in spite of the difficulties of recent months," said Müller.
Delayed VW emissions fixes
Since January, VW has written to all VW Amarok, Audi A4, Audi A5 and Seat Exeo owners and begun enacting a fix on their vehicles. No work has begun on VW passenger cars to date, with the proposed fix for the VW Passat awaiting approval Germany’s motoring body, the KBA. Fixes to the VW Golf will now be prioritised instead.
Indeed, Müller revealed that the fix for the Golf had been approved by the KBA just this morning, so work on affected cars across Europe can immediately begin. In the UK, VW will make contact owners via DVLA data. It may take a few weeks for a letter explaining what to do to reach owners.
“There has been an unexpected delay in the further rollout of the plan,” said Müller. “While we are making progress with Audi and Seat, we are still working at full speed to develop a final solution for the Volkswagen Passat.
“Nevertheless, the fact remains that we will continue to make every effort to execute the recall campaign as quickly, professionally and satisfactorily as possible for the benefit of our customers. This will remain our most important task until the very last vehicle has been put in order.”
While Müller said that the VW Group was withholding details of its sales to date in 2016 on legal advice, he stressed that the firm was optimistic about sales so far this year. However, he admitted that the overall figure for the year could be around 5% down on the 10m cars delivered in 2015, itself 2% down on 2014.
Muller said: "To our regret, our legal counsels have strongly advised against such a disclosure. Disclosure at this time would present unacceptable risks for Volkswagen, especially in view of the situation in the US and the ongoing talks there."
He added that the group’s sales ambitions would take a back seat until it had resolved the fall-out from the emissions scandal: “The drive to break records set in past years has been interrupted. To be quite clear: that doesn't disturb me in the least. We are pursuing a different agenda this year - and are adjusting our priorities anyway.
"More than ever, our most important currency is our credibility and the trust in our brands, in our products and in Volkswagen itself. Regaining that trust will be our most important task over the next few months. All else takes second place to that at the moment. But that does not mean we have buried our ambition; quite the opposite. We do not plan to make it easy for our opposition to weaken us. We will fight for every customer and every car.”
VW’s US emissions deal
Muller also spoke about the ‘deal in principle’ VW has struck with US legislators to deal with vehicles affected by the emissions scandal. Customers in the US can choose to have their car bought back by VW or opt for a technical fix.
On the US deal, Müller said: "The agreement in principle represents a major step forward in resolving the diesel issue and the associated legal disputes as well as in our efforts to provide the affected customers with technical solutions.
“Please understand that we cannot provide any information on further specifics. The court has ordered all parties to maintain strict confidentiality. We will comply with that. We still have a good bit of work ahead of us. Working out the details will involve time, care and strict confidentiality.”
Müller said the investigation into the emissions scandal that VW itself has commissioned from law firm Jones Day is “already far advanced” and was likely to conclude in the fourth quarter of this year.
He added: “Consequently I have no option but to ask once again for your understanding. I would like to assure you that nothing is being hushed up or concealed at Volkswagen. We ourselves have the closest interest in learning everything possible about both the causes and the responsibilities. That is the only way I can learn appropriate lessons from this. And the only way we can ensure that nothing like this will happen at Volkswagen again."
Payments for current and former executives
In total, VW will pay 12 current and former members of its management board £49m, despite postponing some bonus payments until ‘performance criteria’ are fulfilled.
Autocar understands that the term ‘performance criteria’ relates to the aftershocks of the emissions scandal and how that will affect the company’s financial wellbeing.
Müller will be paid £3.7m, of which £684,000 will be withheld.
Hans Dieter Poetsch received £4m for his work as chief financial officer, and a further £10.4m for his new job as chairman of VW’s supervisory board. However, he waived £1.8m of that pay package.
Winterkorn has agreed to defer 30% of his £7m severance payment with VW.
VW’s electric vision
Müller pledged to have the first all-electric car to sit on the bespoke MEB platform on sale by the end of the decade. “We plan to make electric cars one of Volkswagen’s new hallmarks,” he said.
The VW Group’s electric strategy would be led by the Porsche Mission E and a new VW-badged pure electric car: “The Porsche Mission E and a pure-electric flagship from the Volkswagen brand will be key milestones. This also applies for the Audi e-tron quattro concept, which will roll off the production line in Brussels starting in 2018 with a range of more than 500km (310 miles).
“MEB [VW’s electric vehicle platform] will enable entirely new vehicle concepts as well as ranges in excess of 500km (310 miles). The first vehicles produced on that basis will hit the streets at the end of the decade."
Müller also revealed that the firm would be more open to working with partners than ever before, saying: “The era in which our sector kept itself apart from everything is now over, once and for all. Reservations, solo efforts, or even the illusion of knowing and doing everything better will not help us reach our goals.
"The automotive industry is on the cusp on the next innovative leap. The car of the future is more efficient, more intelligent, more comfortable and also safer than ever before. It will be powered by electricity, and in a few years will drive itself. It will be connected via next-generation wireless technology and will always be up to the latest technological standards thanks to continuous software updates.
"We are in a good starting position for this epochal transformation, which will also become a race against time."
Volkswagen also confirmed it is on track to establish a new budget brand based in China, in partnership with its part-owned Chinese arm FAW-Volkswagen.
VW Group's management structure
Müller explained that the VW Group’s management structure has been completely overhauled in a bid to ensure an incident such as the emissions scandal cannot reoccur.
"In the past our work was strictly separated by function: the R&D department developed, the procurement department procured, the production department produced and so forth. Even minor decisions were frequently made by the board of management or its chairman.
“In the future many corporate decisions will be delegated. For us, this is equivalent to a paradigm shift, but it will be well worth the effort, because this is how we will strengthen our corporate eye for the big picture and promote a results focus.
“We are making our decision-making process much faster and shorter,” he added. "I want an open culture, the courage to make innovations and speak your mind, as well as true willingness to co-operate are all part of this.
"As is a constructive approach to dealing with mistakes. It goes without saying that curiosity and an entrepreneurial mindset are part of that package too. And last but not least: a solid system of values as a compass for our daily values at work."
VW Group profits and losses by brand
VW generated sales revenue of £82.7bn in 2015, up 6.5% year-on-year. Operating profit was £1.6bn.
Audi sales revenue rose 8.6% year-on-year to £45.5bn. Operating profit was £3.7bn.
Porsche’s sales revenue rose 25.2% to £16.7bn, with an operating profit of £2.7bn.
Skoda sales revenue was up 6.2% year-on-year to £9.7bn. Profit was £712m.
Seat generated sales of £6.7bn in 2016, but recorded a loss of £7.8m.
Bentley’s sales revenue was £1.48bn, up 10.9% year-on-year, but profit was 34.9% down at £85.6m.
Lamborghini’s figures are included in Audi’s for financial reporting.