FRANKFURT – Automaker Volkswagen saw car sales and operating profit plunge in the first quarter as the coronavirus outbreak closed dealerships and halted production. But the company said it had strong cash reserves and aimed to make a profit for the full year.
Global sales fell 23% to 2 million vehicles in the first three months of the year, from 2.6 million in the year-earlier quarter, the company said Wednesday. Operating earnings excluding financial items such as interest and taxes shrank by 81% to 0.9 billion euros from 4.8 billion euros ($5.2 billion) a year earlier.
The company said Wednesday that despite the disruption from the virus it remained financially strong with what it termed a “robust” cash pile of 17.8 billion euros ($19 billion). Sales revenue fell by 8.3% to 55.1 billion euros.
Chief Financial Officer Frank Witter said in a statement that “the global COVID-19 pandemic substantially impacted our business in the first quarter. We’ve taken numerous countermeasures to cut costs and ensure liquidity and we continue to be robustly positioned financially. The Volkswagen Group is steering through this unprecedented crisis with focus and determination.”
The quarter was marked by the shutdown of the company's plants due to the virus outbreak. Production has re-started in China and is being brought back online in Europe. Auto dealerships have reopened in major markets China and Germany.
There were a few bright spots, such as the company's high-end Porsche division seeing an increase in sales revenue due a higher share of more profitable models in the sales mix, though earnings at the division declined to 529 million euros from 829 million euros.
The company on Monday re-started production at its plant in Wolfsburg, Germany where the company is headquartered, making the Golf model and running at about 10-15% of normal. The pace was expected to rise to 40% next week.
Volkswagen said the group as a whole would make an operating profit for the year but that earnings would be “severely below” last year's.
Besides Volkswagen, the company brands include Audi, Porsche, SEAT, Skoda and Lamborghini.