Volkswagen saw heartening results even exceeding pre-pandemic levels with first-half operating profit before special items hit 11.4 billion euros. The German automaker now expects an operating return on sales of between 6% and 7.5%. It previously projected the return to be 5.5% to 7%.
The Covid-19 pandemic played havoc and caused the demand for vehicles to be badly hit last year. But for Volkswagen, the results have greatly improved and, there is a marked increase in sales from the same period this year.
There is an ever-growing demand for premium cars in the Americas and Europe, with electric vehicle deliveries almost tripling. Volkswagen, as a result, has upped its profit margin target once again for the second time in three months.
Due to the situation created by the pandemic, Volkswagen, like many other major automakers, is feeling the burn. The shortage of semi-conductors in the market is creating hardships in the production line. Even though the scarce supply of semi-conductors has not impacted the earnings made by the company yet, it is bound to feel the pinch shortly if the Covid-19 crisis continues.
The company is facing challenges arising from factors such as; the increasing intensity of competition, the economic situation, and the foreign exchange markets. There are other reasons such as; securing supply chains, volatile commodities, and stringent emissions-related requirements.
But Volkswagen is optimistic that the rebound in demand is a good sign and would be enough to mitigate the various challenges for the company. The company is hopeful of continual growth until the first quarter of 2022. For now, their premium brands are doing well and, their electric vehicle sales are strong.
By 2030, almost half of the sales of Volkswagen, are expected to be battery-operated electric vehicles. It hopes to ensure that by 2040, almost 100% of its new vehicles will be zero-emission vehicles. Volkswagen has already earmarked around 73 billion euros and 50% of the company’s total investments solely to provide support for developing future technologies to be achieved between 2021 and 2025. Volkswagen is aiming to be fully carbon-neutral by 2050.
