Volkswagen Group: a ‘Nokia of the car industry’? No, but swift answers are needed

In 2019, the last financial year before the pandemic, global turnover reached 252.6 billion euros. In 2020, the impact of production shutdowns and the contraction of the automotive market led to an 11.8 per cent decline, down to 222.9 billion. The recovery was swift. In 2021, revenue rebounded to €250.2 billion, representing growth of 12.3 per cent, whilst in 2022 it rose to €279.1 billion. In 2023, Volkswagen surpassed the 300 billion mark for the first time, reaching 322.3 billion thanks to a year-on-year increase of 15.5 per cent. This growth in revenue was not accompanied by a similarly steady trend in operating profit. In 2011, the group had recorded an operating profit of 11.3 billion euros, equivalent to 7.1 per cent of turnover. This figure remained close to these levels over the following three financial years, at 11.5 billion in 2012, 11.7 billion in 2013 and 12.7 billion in 2014.

In 2015, provisions and costs relating to Dieselgate resulted in an operating loss of 4.1 billion, with a margin of minus 1.9 per cent. In 2016, Volkswagen returned to profit with 7.1 billion, rising to 13.8 billion in 2017 and 13.9 billion in 2018. In 2019, operating profit reached 17 billion, before falling to 9.7 billion in 2020. The highest figure for the period was recorded after the pandemic. In 2021, operating profit rose to 19.3 billion and in 2022 to 22.1 billion. The peak was reached in 2023 at 22.5 billion, with a margin of 7 per cent. In 2024, operating profit fell to 19.1 billion, with an operating margin of 5.9 per cent. The decline became more pronounced in 2025, when operating profit stood at 8.9 billion and the margin fell to 2.8 per cent. Compared with 2011, turnover had more than doubled, whilst operating profit was 21.3 per cent lower.

Cash flow from operating activities also showed an uneven trend. It fell from around €8.5 billion in 2011 to €7.2 billion in 2012, before rising to €12.6 billion in 2013. In 2014, operating cash flow stood at 10.8 billion, and in 2015 at 13.7 billion. Following the figure of 9.4 billion in 2016, the figure turned negative in 2017, standing at a loss of 1.2 billion, partly due to changes in receivables, leases and working capital linked to the group’s financial activities. In 2018, operating cash flow returned to positive territory at 7.3 billion, rising to 18 billion in 2019 and 24.9 billion in 2020. The fifteen-year high was reached in 2021 at 38.6 billion euros. Since then, a gradual decline has set in, with figures of 28.5 billion in 2022, 19.4 billion in 2023, 17.2 billion in 2024 and 15 billion in 2025. 

The response on how to manage the crisis came from the Board of Directors to the Supervisory Board, where the group led by Oliver Blume presented a plan comprising various strategic initiatives and targets for 2030. This programme does not explicitly mention plant closures or redundancies but, amongst its immediate priorities, includes reducing complexity and the number of variants within the product range, achieving closer alignment between products, technologies and the specific characteristics of regional markets, the adjustment of production capacity to changing demand, and the simplification of the Group’s organisational structures and investment portfolio. In plain terms? Fewer models and variants, a reduction in production capacity to bring it into line with demand, the divestment of businesses not strictly related to the automotive sector, the production of cars that meet the demands of key markets, starting with China, and leaner structures regarding non-production staff. Although the picture appears complex, the VW Group continues to lead the European market in terms of new car registrations and is set to do so in 2025. The programme envisages a focus on automotive activities. The portfolio of shareholdings and investments will be managed with greater attention to strategic contribution, return on investment and capital allocation. The aim is to increase focus, reduce complexity and enhance financial flexibility. The agreement reached at the end of June to sell the majority stake in Everllence is also part of this strategy. The transaction will generate a cash inflow of approximately €7.4 billion, strengthening the group’s financial position and expanding its investment capacity for future strategic development. There is no substantiated information regarding a possible sale of Ducati or the listing of Lamborghini.