Volkswagen Group posted solid financial results in the third quarter, total vehicle deliveries to customers were up in Q3, with overall operating result increasing from EUR 2.6bn in a supply-constricted Q3 2021 to EUR4.3bn.

The results were driven by strong profitability, in particular across the Premium and Sport & Luxury segments as well as Financial Services.

The Premium brand group achieved a 14,1% margin and Sport & Luxury a 19,4% margin. However, overall the operating result was weighed down by non-recurring costs totaling around EUR 1.6bn related to revaluation effects due to the Group’s suspended activities in Russia and costs associated with the Porsche IPO.

Furthermore, Volkswagen is focusing its development activities for autonomous and highly automated driving. Subsequently, the financial result was burdened by a EUR 1.9bn non-cash impairment charge following the Group’s withdrawal from its investment in Argo AI.

Financial Highlights

• Operating result before special items Q1-Q3 of EUR 17.5bn reflecting an operating margin of [8.6%]
• Volkswagen Group confirms margin guidance of 7-8.5% at the upper end of the range
• Overall Q3 revenues up year-on-year from EUR 56.9 bn to 70.7 bn vs a supply constrained Q3 2021
• Q3 operating result up year-on-year to EUR 4.3 bn. Q3 margin of 6% burdened by non-recurring items of EUR 1.6bn
• Accelerating recovery in China, with 27% increase in deliveries in Q3

Oliver Blume, CEO Volkswagen Group, said: “In the third quarter, Volkswagen made some significant strides towards generating greater sustainable value for shareholders. The successful Porsche IPO has demonstrated the continued strength of our brands and the opportunity of realising their full potential.

With regard to the 10 points of my strategic agenda, I’m pleased to see that we made progress in two key areas already, China and the U.S.

In China we teamed up with Horizon Robotics, and in the U.S. we started production of the ID.4. Also, we took another step towards securing the supply of cathode materials needed for our ambitious EV ramp-up plans by launching a joint venture with Umicore. It has been a great team effort which will need to continue to take our Group to the next level.”

All-electric vehicles reached a 6.8% share of total deliveries in Q3, sequentially increasing over the year, with China remaining the biggest driver in BEV deliveries.

In the year to date, 366,400 BEVs have been handed over to customers globally, 25% up from 293,000 in the prior-year period. Due to strong demand and ongoing supply constraints, the Group’s BEV order bank in Western Europe remains at a high level of over 350,000 vehicles.

The Group’s recovery in China continues to accelerate with a 26% increase in deliveries in Q3, and a 33% increase in deliveries in September.

In particular, demand for BEV vehicles in the region continues to grow and deliveries more than doubled in the year-to-date to 112,700 units (Q1-Q3 2021: 47,100). The Group is thus well on its way to doubling deliveries of all-electric vehicles in China, its largest market, even compared with the previous year as a whole.

To speed-up the pace of innovation and strengthen its customer focus in this important market, Volkswagen’s software unit Cariad entered a new partnership with Horizon Robotics, one of the leading providers of computing solutions for smart vehicles in China.

The Joint Venture is expected to accelerate the regional development of Advanced Driver Assistance System (ADAS) and Autonomous Driving (AD) systems for the Chinese market.

Outlook

The Volkswagen Group’s sales revenue in 2022 is expected to be 8% to 13% higher than in the previous year, and that of the Passenger Cars Division 5% to 10% higher.

In terms of operating margin the Group continues to expect to come in at the upper end of the corridor of 7 to 8,5%. Reported net cash flow is expected to remain at the same level as in 2021.

In 2022, net liquidity in the Automotive Division is further anticipated to be up to 15% higher than the prior-year figure, before Porsche IPO proceeds.

As a result of the structural undersupply of semiconductors, the 2022 financial year will continue to be burdened by supply bottlenecks. The company expects the supply of semiconductors to improve further in the fourth quarter. Disruptions in logistics could have an additional negative impact.