Volkswagen (VOW3.DE) expects to make an operating profit in 2020, despite the global coronavirus pandemic devastating car sales.
The world’s largest carmaker by sales said on Wednesday that it expects sales revenue to be “significantly below” last year’s levels. VW said that while the group expects a “severe” year-on-year drop in operating profit, it will “still remain positive” thanks to its cost-cutting.
“The global COVID-19 pandemic substantially impacted our business in the first quarter,” said Volkswagen CFO Frank Witter in a statement. “We’ve taken numerous countermeasures to cut costs and ensure liquidity and we continue to be robustly positioned financially.”
The company said its net liquidity remains “robust” at €17.8bn (£15.5bn, $19.3bn).
In the first quarter, VW car deliveries fell by 23% compared to the same three months a year ago. Sales revenue for the group, which includes Audi, Seat, Skoda, and Porsche, fell by 8.3% in the January to March period to just over €55bn, while operating profit before special items decreased significantly by over 81% from €3.9bn to €900m.
Mercedes-Benz owner Daimler (DAI.DE) had an equally grim first quarter due to the pandemic. The maker of Mercedes-Benz cars said today that sales revenue in the first quarter was down 6% to €37.2bn, and profit after tax for the quarter slumped to €168m, from nearly €2.2bn in the same period last year.
Like its global rivals, Volkswagen was forced to close down plants in the important Chinese markets earlier this year, and across Europe and the rest of the world in mid-March, after supply chains stopped functioning, demand dried up, and dealerships were closed as part of national coronavirus lockdowns.
VW’s plants and dealerships are mostly open again in China. It brought its biggest plant, in Wolfsburg, Germany back online this week and is gradually restarting factories across Europe.
In its home base of Germany, VW has been lobbying the government to back incentives to encourage people to buy new cars.