12 May 2016

VW Profit Per Brand : 2013-15

Making money is what capitalism thrives on. Looking at the car industry, it would be hard to believe that sometimes. Volume is often viewed as paramount, as it reduces cost per unit...to a point. Chasing too much volume becomes unprofitable so is damaging to the company. In other words, excessive pursuit of volume hurts the industry as a whole.

Looking at VW Group as an example is illuminating. It has a variety of brands within its range, including mainstream, premium and super luxury marques. Let's look at each one, using data provided by VW. It excludes its China joint venture arrangements. For the columns, 'Sales' is in thousands, 'Millions €' is how much the sales brought in millions of €, and '€ Per Car' is how much was made in € per car as a complete figure.

Porsche: It has a non-flexible profit target. In 2016, it seems that volume will be sacrificed for maintaining it. From the way VW presents its figures, €15,500 was achieved in 2015 per unit delivered. It was helped by a favourable exchange rate for the €.

Bentley: It managed to get €10,000 per car in 2015, down on the usual figure due to greater expenditure for new product.

Audi: Sales keep rising while profit is stable and therefore, down per unit delivered. The premium segment is getting very competitive, but overall profit is still good.

Škoda: Profits are rising nicely, along with sales. What every manufacturer wants. A kind exchange rate is handy too.

VW LCV: Light commercial vehicles sales volume is holding, but profits are slipping in achieving that. Not ideal.

VW Car: Sales and profit are down here. South America is a more profitable area for the brand and sales are well down there. It has too much market share in Europe as well, probably trying to keep factories running as close to capacity as possible.

SEAT: The Spanish brand within VW Group is getting close to the break even point. Increased delivery volume - but not at the expense of margins - is starting to pay off.

2015 2014 2013
Brand Sales Millions € € Per Car Sales Millions € € Per Car Sales Millions € € Per Car
Porsche 219 3,404 15,543 187 2,718 14,535 155 2,579 16,639
Bentley 11 110 10,000 11 170 15,455 11 168 15,273
Audi 1,529 5,134 3,358 1,444 5,150 3,566 1,349 5,030 3,729
Škoda 800 915 1,144 796 817 1,026 719 522 726
VW LC 456 382 838 442 504 1,140 436 448 1,028
VW Car 4,424 2,102 475 4,583 2,476 540 4,704 2,894 615
SEAT 544 -10 -18 501 -127 -253 459 -152 -331

Data source: VW Group.

Summary: I have omitted the diesel scandal in comments here because the real cost of that will come in 2016. As a Group, some brands are doing things well, others not so much. Porsche, Bentley and Škoda are in good health. Audi is too - but needs more SUVs - which are coming. SEAT has been the problem child but is finally getting there. VW branded cars are not profitable enough. The scandal will only exacerbate that. 

It's hard to knock a company at the top end of the world's car manufacturers for size. Every company could do better. If Toyota was more open with its data, I could do an article on that company too. VW is to be commended for its transparency in allowing us this insight into the Group. It's not all doom and gloom, although 2016 will be difficult due to an issue it brought on itself.

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