Records galore for VW, despite diesel woes
March 13, 2018
Crisis? What crisis?
Those with only a passing interest in the affairs of Germany's automotive giants would be forgiven for assuming that the news is only bad these days for companies such as Volkswagen. It has, after all, been mired in scandals over diesel for the past few years, ranging from designing software to cheat emissions tests to locking up monkeys in chambers and exposing them to exhaust fumes.
Looking at their 2017 financial figures, released in full on Tuesday morning at a press conference in Berlin, an obvious conclusion to draw is that if this is what a crisis looks like, then crises are something we all need a little more of in our lives.
Despite all the controversy and the fears over the future of diesel, not to mention the heavy cost of investment being pumped with ever-increasing urgency into e-mobility, last year the Volkswagen Group achieved record revenue and profit figures.
Operating profit has nearly doubled to €13.8 billion ($17.03 billion) after deducting special items while group sales revenue also soared to record levels, up 6.2 percent to €230.7 billion.
Driving all the way to the bank
Another remarkably strong indicator was the number of vehicles sold. The Volkswagen Group, which covers several brands beyond the core VW brand such as Audi, SEAT and Skoda, sold 10.7 million vehicles in 2017, an increase of nearly 4 percent from 2016 and more than ever before.
Probably the biggest winners from Volkswagen's bumper year are their CEO Matthias Müller and the overall top executive board at Volkswagen, all of whom have seen substantial pay increases over the past year.
Read more: VW owners close ranks, defying investors' ire
Müller's salary package swelled by 40 percent, up to €10.14 million in pay and benefits.
A year ago, Europe's biggest carmaker introduced new payment rules for managers following criticism from investors over the huge bonuses paid to executives in the wake of the Dieselgate scandal. One of the new rules was that the CEO's pay had to be capped at €10 million.
Yet, the 64-year-old Müller has exceeded that because of perks and retirement provisions, ahead of the end of his contract in 2020. Overall compensation for the VW executive board has also jumped by 27 percent to €50.3 million.
Surging towards an electric future?
The record profits and remuneration packages come despite ongoing controversies emanating from the 2015 Dieselgate scandal, which afflicted Volkswagen and several other carmakers. Just six weeks ago, Volkswagen suspended its head of external relations and sustainability over his knowledge of experiments where monkeys were heavily exposed to exhaust fumes.
The Dieselgate scandal has dramatically intensified changes in the German car industry. Diesel car sales are falling fast, a trend likely to increase in the wake of last month's court ruling which paved the way for diesel bans in German cities.
The problems with diesel, and the increasing demands on carmakers to lower their emissions levels generally, has led to heavy investment in electric and alternative fuel vehicles.
At Tuesday's event, Volkswagen announced several new developments in its ongoing e-mobility drive.
The group has plans to unveil 80 new electric models across its brand range between now and 2025 and wants to have an electric version of its some 300 brand models by 2030.
As part of this massive investment, it says it has selected 16 new locations around the world which will start producing battery-powered vehicles by the end of 2022. To meet the battery requirements of this undertaking, it has entered partnerships with battery cell makers in China and Europe to the tune of €20 billion.
"Over the last few months, we have pulled out all the stops to implement ‘Roadmap E' with the necessary speed and determination," said Chief Financial Officer Frank Witter.
The Volkswagen supertanker chugs forth
However, despite the e-mobility announcements, Müller emphasized the group's commitment to existing drive systems, including diesel. "We are putting almost €20 billion into our conventional vehicle and drive portfolio in 2018, with a total of more than €90 billion scheduled over the next five years," he said.
Speaking to journalists at the event, Müller was bullish about the future for diesel. "I don't only hope that diesel won't be talked to death, I am convinced that diesel is experiencing a renaissance," he said.
Going by these results at least, Volkswagen has not only weathered the storm but is now charging through the clear blue waters beyond it.
"We are financially robust and strategically well-positioned," Müller said. "Things are really moving. And we have plans for much more. A change of course for the Volkswagen supertanker full speed ahead to the future!"
That future very much depends on the commitments being made now becoming reality. Promises were made before, after all.