Did we mention that there is a remake of the economic miracle in Europe going on? Despite tanking car sales, despite daily stories about near bankrupt EU-countries, European manufacturers are in high gear. Did we mention that despite imploding sales at home, Volkswagen delivered 16 percent more units to customers in the first six months of 2010? One would think that might have some bearing on VeeDub’s financials. It sure did.
In the first half of 2010, Volkswagen more than doubled its operating profit to €2.8b (€1.2b in H1 2009). But wait, this figure does not include the operating profit of €804m from the joint ventures in China. That number jumped from €294m in the same period of 2009. All in all, VW more than tripled its profit before tax to €2.6b (€0.8b H1 2009). Once taxes are paid, a tidy profit of €1.8b ($2.35b) will remain in Volkswagen’s books, a nice jump from €0.5b in the same period of 2009.
The good news “were clearly in excess of our expectations”, admitted Martin Winterkorn at the presentation of the interim report. Perception gap, made in Germany. His CFO Hans Dieter Pötsch added that “high demand for Group models in Western Europe, China, and North and South America was a key reason for our strong result, along with the boost provided by lower product costs and positive exchange rate effects.”
Volkswagen sits on something that has become nearly extinct in the business: a pile of money. According to a Volkswagen communiqué, “net liquidity in the Automotive Division increased further in the reporting period to €17.5b, up 42.2 percent year-on-year.” In US dollars, that’s around $23b in free cash-flow.
For the rest of the year, “the Board of Management expects that deliveries to customers will be significantly higher than in 2009, due among other factors to the positive business growth in China.” If you are a numbers junkie, the complete half year report can be downloaded here.
“Volkswagen sits on something that has become nearly extinct in the business: a pile of money.”
As far as I remember, Toyota’s pile was WAY bigger… like 4-5 times bigger.
I’ll care more about this when they can make consistantly reliable cars.
Agreed. Their cars look nice, but I have heard far too many horror stories. I refuse to buy just a badge.
Amen, and sell an UP!, Polo or Golf convertible in the states.
They should take that pile of money and write a check to all the VW owners who’s cars crapped out right on the brink of warranty expiration
How much comes from the relatively-weak Euro this year, thanks to the PIIGS debt problems?
But..but…VW makes unreliable cars! It takes 20 years to rebuild a trashed reputation in the auto world!
OK, enough with the sarcasm.
Word on the street is that the MKV and MKVI cars are very reliable. I know a few people with these cars (myself included) and we are very happy.
Yes, the MKIV cars were problematic, but that was two model generations ago. VW has also been stepping up to the plate for warranty extensions where necessary. (VW extended my DSG warranty for a potential problem – so far so good.)
VW dealers have also gotten MUCH better. My wife and I bought our MKIV cars in year 2000, and it was a horrendously bad experience – on par with the worst of the domestics.
Fast forward to 2008 and the dealer fired all the trouble-makers, built a new, stand-alone, facility and hired some really nice people. Unfortunately my Jeep dealer did not do these things and went out of business.
It appears that VW has worked hard to fix their product and dealerships and the strategy seems to be paying off.
That, and the Japanese automakers seem to be falling on their faces.
-ted
Word on the street is that the MKV and MKVI cars are very reliable.
The oldest MK4 is only 7 year old now. It’s a bit pre-mature to talk about “reliability”. Let see how reliable they are at the 10 year mark.
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That, and the Japanese automakers seem to be falling on their faces.
In the NA market, Toyota sells 1400% more cars than the VW. If that’s “falling on faces”, did VW just stick its head into its own ass? What a maneuver!
The MKV’s were able to rid themselves of most of the ridiculous electronic and build quality issues, but they still suffered from poor engineering. The 2.0T was a piece of crud in the first few years…a whole bunch of issues that required constant checkups and part replacements, misfires etc….not to mention is used a timing belt. The DSG was a minor disaster too, $7000 repair bills? No thanks.
Not to mention they still had stupid problems, like sheared bolts in the Passat V6’s that destroyed engines, and roofliners coming unglued.
Small clarification, WSN – VW started selling the Mk IV Jetta in early 1999 and the Mk IV Golf in 1998. I can personally vouch for the Mk IVs being complete crap with a bow on it.
As for the Mk Vs, I’ve heard significantly better reports on those, which started shipping in 2005, IIRC.
That’s great, but I’m still not going to consider any VDub product until they quit patronizing me w/those crappy ads (talking Beetle, “Autobahn” sales event, flaky “Apple Virus” vibe, etc.). Not to mention, I need a medium-to-large 4-door sedan with modern styling, reliability & decent MPG #s…things the Passat does not possess.
As for commentary about Japanese automakers “falling on their faces,” I think that is a bit of drama. I’m no Toyo/Honda fanboy, but their financials seem to be better than fine. At the end of the day, VW N. America is still a boutique endeavor…
“His CFO Hans Dieter Pötsch added that “high demand for Group models in Western Europe, China, and North and South America.”
Yes, but what about Australia, Antarctica, Micronesia and Belarus?
The weak Euro has given VW a boost in a few markets. But keep in mind that VW has always been the undisputed king of dominating ‘protected markets’ by offering local production of varying types.
It would be interesting to see whether their maintenance costs will truly hold up to say… a Chrysler. VW has offered a bastard’s worth of weird tools and substandard components over the last ten years. Ironically enough, this did help NA dealers by the fact that they were able to offer lowball prices for their trade-in’s and make a far healthier profit on their used VW’s. But of course that wasn’t the intention.
I’ve been checking some Aussie sites (for price references), and for the price of a Jetta you can get a nicely equipped Commodore. UsedxUsed, or near new x near new.
I’m sorry for the import snobs, fuel economy nazis and some other species… but Commodore > Jetta hands down. Or at least I’d take the Holden over the VW any day, even if it’s V6.
See:
http://www.carpoint.com.au/all-cars/bncis/details.aspx?R=8709684&__sid=12A203212DFA&__Qpb=true&Cr=7&__Ns=pCar_YearMade_Int32|1||pCar_RankSort_Int32|1||pCar_PriceSort_Decimal|0&keywords=&__N=834%201216%201246%201247%201252%201282%204294965857%204294965745&seot=1&__Nne=15&trecs=11796&silo=1011
and
http://www.carpoint.com.au/all-cars/bncis/details.aspx?R=9021797&__sid=12A203212DFA&__Qpb=true&Cr=6&__Ns=pCar_YearMade_Int32|1||pCar_RankSort_Int32|1||pCar_PriceSort_Decimal|0&keywords=&__N=834%201216%201246%201247%201252%201282%204294962746%204294962496&seot=1&__Nne=15&trecs=366&silo=1011
The obvious change would be for Volkswagen to offer longer warranties. A 5 year 60k mile bumper-to-bumper warranty would be a big improvement over the current 3 year 36k warranty. If quality really has improved and repair costs are reasonable, Volkswagen spends little to win some customers who are on the fence.
Commodore and Jetta are in completely different size markets, the closet Holden (Daewoo) product is the Epica (Tosca), not to mention the rest.
Having no great affection or allegiance to either of our local manufactures, and driving several variants of each lately (albeit rental cars), if you were after a large car the Ford Falcon wins hands-down in my experience. No matter what Holden do with that V6 it sounds and feels like a bag of asthmatic bolts about to explode whenever you push it, the V8 is far better, but then the Ford I6 Turbo is better again!
I see that Autolies is stealing TTAC articles again.
If only VW’s performance in reliability was as good as their performance in cost cutting.
I didn’t want to imply that the Japanese are out for the count. They are huge force in the auto world. What I meant to imply was that the public PERCEIVES that Japanese car makers are having quality problems and that the Germans might deserve another look.
By the way, the “CCTA” 2.0T uses a timing chain. The “BPY” 2.0T uses a belt. The CCTA replaced its belt-driven counterpart, and has been available since late 2008.
As I write this, Bloomberg TV is running a story about some new Toyota Avalon steering lock recall – good timing huh?
-ted
Id love to see the breakdown…profit on cars sold vs. parts. VW/Audis break in fairly predictable ways. I once saw two pre-pumps
on two identical Jetta diesels break within hours of each other. The manual still ran, the auto didnt. Then theres the timing belts, the turbos, the electrical issues, the Fd-up scantool system. Thats just the 4-cylinders. V6s and bigger…Good Luck. Even the dealers dont know how to fix em.
Im sure BMW and Mercedes will be reporting “record profits” soon also.
This article started off good but the VW hate group seemed to take control. A lot of people love to run off at the mouth with no facts at all. I know many people who have many types of cars and the truth is Toyota’s and Honda’s do not run for ever. No car is perfect.I have been driving VW’s for over 30 years and have had a few problems no big deal but overall most have run well over 200,000 miles. On the other hand i have also had Toyota’s and Honda”s and a few Subaru’s & Mazda and had a few problems with them. The worst was the Mazda complete junk. (Almost killed the dealer). Cheap, Cheap, Cheap. Had one accident in a VW MK2 with a Lincoln at 50 miles per hour and walked away with out a scratch. The Lincoln driver was not so luckly. I will keep driving VW’s.
What is it with people and Audi/VW? The hate is palpable. I just drove an Audi A4 for 65k miles with zero problems. Zero. One of the best cars I’ve owned. And the dealership experience was by far the best I have encountered. I now have a VW GTI and again…no problems. I know my experience is statistically irrelevant and all but I will let the cars talk for themselves and buy what I enjoy driving.
Amazing that VeeDub is doing so well. Quality is still a big step below Toyota. I still like em’ though. Our Tourareg had a TON of problems, but fortunately most were under warranty. My Audi’s have been great though, so mixed bag I guess. Still worth it over driving the deathly bland alternatives.