Analysis: VW’s performance so far this year

With sales statistics for the first three quarters of the year having been released, headlines have been claiming that VW has once again outsold Toyota. According to those statistics, VW sold a total of 7.61 million automobiles to Toyota’s 7.53 million.

VW has been in dire straits since the emissions scandal, when their passenger car division’s revenue fell by around half. Since then sales of passenger car sales have been recovering.

VW’s sales revenue for the first three quarters of the year totaled 159.93 billion euros, down 0.2% from the 160.26 billion euros recorded a year ago. Revenue for the third quarter alone totaled 51.99 billion euros, representing slight growth of 1.0% from the 51.48 billion euros reported in the third quarter of last year.

Meanwhile VW’s operating profit for the first three quarters of the year totaled 8.64 billion euros, up a full 158.7% year-on-year. However this growth rate is misleading since one has to take in account how poor VW’s performance was last year. Operating profit for the third quarter alone totaled 3.31 billion euros, with a profit rate of 6.4%; by comparison, last year’s operating profit was 3.47 billion euros, with a deficit of 6.8%.

VW’s net profits for the first three quarters of this year totaled 5.91 billion euros, up 48.2% from the 3.99 billion euros recorded last year. The company’s net profit rate increased from 2.5% to 3.7%. VW’s net profit for the third quarter of the year totaled 2.33 billion euros, compared to a net deficit of 1.67 billion euros recorded in the third quarter of 2015. 

Over half of VW’s net profits, 3.91 billion euros, came from Audi. Behind that was Porsche, which accumulated net profits of 2.85 billion euros, representing year-on-year growth of 12.3%.

When comparing this year’s figures with last year’s, VW is clearly focused on recovering from bad press generated from the emission scandal last year. VW has already agreed to pay $14.7 billion in compensation in the US. Given that VW’s sales have grown 2.4% year-on-year over the first three quarters of the year, compared to Toyota’s 0.4% year-on-year growth rate, it seems that VW will lead Toyota in terms of total sales for the year.

However it is worth remembering that Toyota possesses many advantages of its own. Toyota’s net profit rate is very high in the market, and it hasn’t suffered from the bad press that VW has of late. Looking before the emissions scandal broke out, Toyota reported earning a net profit of $5.17 billion in the second quarter of 2015, 78% higher than the $2.91 billion that VW earned.

China remains the largest and most profitable market for these two giants to compete over. VW has established two joint ventures in the country: Shanghai VW, which it holds a 50% stake in, and FAW-VW, which it holds a 40% stake in it. Therefore its important to remember that VW has the rights to less than half of the profits of its vehicles sold in China. Despite that, the Chinese market accounts for 32% of VW’s sales and profits globally.

VW’s sales, income, profits and growth figures all show that the company is in the process of recovery. How it and other major automakers will continue to fare depends on a number of variables that require extensive analysis to fully comprehend.