The disastrous financial effects brought about by the COVID-19 pandemic continues. Even after the economies of certain countries have reopened, business is still slow. Worse yet, a new wave of cases is forcing some countries to go under quarantine or lockdown once more. Even one of the world’s largest automakers, Volkswagen, can’t escape the effects of the pandemic.
For the months of January to June 2020, Volkswagen recorded a huge 26.7% sales drop as compared to the same period in 2019 with only 2.2 million units being delivered. Subsequently, sales revenue was down by to around EUR 29 billion, a decrease of 35.5%, or approximately EUR 16 billion from the first half of 2019. As a result, the company reports a net cash flow of EUR -3.7 billion; yes, negative.
To give you an idea of how bad the first-half of 2020 hit Volkswagen, no region experienced an increase in sales. The hardest-hit region was Western Europe with sales down by 39.5% as compared to the same period 2019. Meanwhile, China (including Hong Kong) was the least affected with only an 18.3% decrease. This can likely be attributed to the country's reopening earlier than others.
“The COVID-19 pandemic presented unprecedented challenges to Volkswagen in the first half of the year and had a strong impact on our financial figures. However, thanks to effective countermeasures such as strict cost discipline and prioritization of projects, we succeeded in substantially reducing general overhead costs, R&D expenditure, and capital expenditures. With outstanding teamwork, staff and management have steered the brand on a stable course through this crisis so far. Our financial situation is still solid and we are aiming for an operating profit for the year as a whole,” said Alexander Seitz, CFO of the Volkswagen brand.
Despite the signs of recovery earlier this year, Volkswagen says that it will be difficult to predict the months to come. They do expect that sales revenue to be significantly lower compared to 2019. Hopefully, the brand’s newly launched models such as the Tiguan, Golf, Arteon, and Touareg will help boost the company’s sales in the latter half of 2020.