Volkswagen urges Germany to help boost demand for cars as profit plunges

Volkswagen urged the German government on Wednesday to help boost demand for cars as the coronavirus pandemic triggered a plunge in first-quarter operating profit and the world's biggest automaker warned of a difficult second quarter.

"We need a swift decision on buyer incentives," Chief Financial Officer Frank Witter said, ahead of a meeting between politicians and lobbyists in Berlin to decide on a potential stimulus plan to revive demand.

Car sales across the world have slumped as measures to contain the pandemic forced production lines to shut and showrooms to close, starving manufacturers of much needed cash for investments.

Volkswagen also warned a planned dividend increase might have to be reconsidered. In February, it proposed raising the payout to 6.50 euros per ordinary share, up from 4.80 euros in 2018, and 6.56 euros per preferred share, up from 4.86 euros.

"This decision is ultimately reserved for the annual general meeting and will of course continue to be subject to review depending on the further development of this year, whether momentum, confidence and thus results and liquidity return," Witter said.

Global passenger car sales are expected to drop by 15%-20%, Volkswagen forecast, echoing auto supplier Robert Bosch, which also said on Wednesday it saw a fall in car production of at least 20% this year.

Earlier this month, Volkswagen said first-quarter car sales dropped by 23% from the year before, causing operating profit to tumble 81% in the three month period and forcing the car and trucks manufacturer to withdraw its guidance for 2020.

In February, Volkswagen had said it aimed for customer deliveries in line with 2019, revenue growth of 4%, and slightly higher passenger car deliveries.