VW posts €10bn profit in pandemic-ravaged year after late recovery

 VW posts €10bn profit in pandemic-ravaged year after late recovery

Volkswagen defied the pandemic to post operating profits of €10bn last year after the German group benefited from a late Chinese-led recovery in the global car market.

The world’s largest carmaker, which looked set to record big losses in the early months of the Covid-19 crisis, hailed “quite robust” sales in the second half of 2020, in a release ahead of full results in February.

VW Group, which includes the Audi, Porsche and Seat brands, said the final three months of last year were the strongest.

It helped the Wolfsburg-based company post operating profits, before one-off charges related to the diesel emissions scandal, that were about half that of the €19.3bn in 2019, and net cash flow of approximately €6bn.

Shares rose 3 per cent to €166.62 by early afternoon trading in Frankfurt.

VW is the first big automaker to release figures for the pandemic-ridden year, in which overall sales are expected to dip by more than 15 per cent worldwide.

Arndt Ellinghorst, an auto analyst at Bernstein, praised the ability of VW to turn a substantial profit “in one of the worst economic downturns ever”.

“They have generated €5.7bn in free cash flow in the fourth quarter,” he said. “That is really, really massive.”

He added: “The financial market completely underestimates the power of all these traditional carmakers.”

While the VW marque stuttered in 2020, with delayed launches of its Golf 8 model and its flagship electric car, the ID. 3, the group’s premium brands enjoyed an extraordinary rebound, particularly in China.

Audi recorded its best-ever quarter in the last three months of 2020, selling more than half a million cars in the period for the first time.

Porsche sales dropped just 3 per cent over the course of the year, and deliveries in China were up by more than 2,000 units on 2019, despite widespread lockdowns and dealership closures.

Overall, the VW Group sold 15 per cent fewer cars last year than in 2019.

The preliminary figures followed the group’s announcement it would have to pay more than €100m to Brussels after failing to sell enough battery-powered and hybrid cars to meet the EU’s CO2 emissions targets.

While the financial hit has already been booked in previous quarters, the penalty marks a setback for the group, which is betting tens of billions of euros on a bid to overtake Tesla as the electric vehicle superpower.

Herbert Diess, chief executive, said the pandemic had hampered the rollout of emissions-free vehicles, but emphasised the carmaker would meet its goals in 2021.

Domestic rival BMW said on Friday it had exceeded its EU target, which was to bring down fleet-wide emissions to 104 grammes of carbon dioxide per kilometre driven, by roughly five grammes, ending 2020 with an average of 99g/km.

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