Volkswagen's profit increases despite selling fewer cars last year

Volkswagen announced about its profits that registered an increase of 75 per cent that is 15.4 billion euros ($16.8 billion) despite the auto major selling fewer cars last year. Volkswagen attributed its lesser sales to the global semiconductor shortage and it credited the profits to buyers who opted for better-equipped cars.

The company that owns 12 brands sold 8.6 million cars last year is 6,00,000 fewer than in 2020 and 2.4 million below the 2019 mark. Volkswagen's sales revenue observed a rise of 12 per cent in part due to ‘favourable pricing’ and reduction in costs.

Volkswagen is aiming to increase its sales volumes by 5 to 10 per cent this year despite the chip crisis around the world. However, its forecast is subjected to the situation in Ukraine that may adversely impact the automaker's supply chain and the global economy as a whole.

The auto major is guessing that the revenues can increase between 8 to 13 per cent this year along with operating returns on sales that may touch 7 and 8.5 per cent compared to 7.7 per cent last year and 4.3 per cent in 2020. Volkswagen's financial director Arno Antlitz said last year customers went to buy better-equipped cars and hence premium brands fared slightly better than less expensive volume brands. In addition to that, the company was able to give fewer discounts and concentrate its semiconductor sourcing on Europe at the expense of other less profitable regions, Antlitz added.

Despite sailing through the pandemic, Volkswagen, currently, is concerned about the Russian-Ukraine war that can impact the European economies on a much more adverse level than the pandemic. Volkswagen CEO Herbert Diess recently stated if the war between the two countries stretches, Germany and other European economies will face the worse compared to what it did in the initial crucial pandemic years and the semiconductor shortage will only widen.

(With inputs from AFP)