Müller reaffirmed the goal of playing a key role in e-mobility, with the Volkswagen Group planning to launch over 20 additional models by 2020—a target originally voiced by former Group head Martin Winterkorn at the Frankfurt auto show last fall, before the breaking of the diesel emissions scandal. (Earlier post.) Müller had also confirmed the 20-model target in January (earlier post).

The Volkswagen brand is currently developing its own architecture especially for e-vehicles in the form of its Modular Electrification Toolkit (MEB). The first vehicles produced on the MEB basis are slated to hit the streets at the end of the decade.

We plan to make electric cars one of Volkswagen’s new hallmarks.

—Matthias Müller

In addition to building up and expanding its own resources for the major fields of future importance, the Group plans to open itself up more to new partnerships and strategic investments.

Digitalization and the field of mobility services in particular offer high earnings potential, said Müller, adding that the Group will soon form a legally independent, Group-wide company to promote business in the mobility services of the future with the necessary speed, entrepreneurial focus and the required agility.

Besides the extensive realignment of the Group, working through the diesel issue will dominate activities at Volkswagen this year. Müller said that the most important task in this context is still providing compelling solutions for the customers affected.

Key figures for 2015. The Volkswagen Group delivered 9.9 million vehicles to customers in fiscal year 2015, 2.0% fewer than in the previous year; however, the Group saw increased total sales revenue. Improvements in the mix, positive exchange rate effects and the financial services business helped sales revenue to reach €213.3 billion (previous year: €202.5 billion), thus exceeding the prior year’s figure by 5.4%. Excluding special items, the Volkswagen’s operating profit was on a level with 2014, at €12.8 billion. The operating return on sales before special items was in the expected range, at 6.0%.

The diesel issue led to total exceptional charges of €16.2 billion in 2015, which were recognized in the operating result. This figure includes provisions for pending technical modifications to the affected diesel engines and repurchases that come to €7.8 billion in total. Volkswagen also set aside another €7.0 billion as a provision for legal risks worldwide.

Overall, negative special items recognized in the operating result came to a total of €16.9 billion in the past fiscal year. As a result, the operating result declined sharply to €–4.1 (12.7) billion. The operating return on sales decreased to –1.9 (6.3)%.

The delivery figures also include the vehicles sold by the Chinese joint ventures. Last year, Volkswagen sold 3.5 million units in China (incl. Hong Kong), 3.4% fewer than in the preceding year. The business of the Chinese joint ventures is not included in the Group’s sales revenue and operating profit, however. From the very beginning, it has been accounted for in the financial result using the equity method. The share of operating profit attributable to the Chinese joint ventures in 2015 remained at approximately €5.2 billion.

On the whole, earnings before tax of the Volkswagen Group in 2015 came to –€1.3 (14.8) billion. The return on sales before tax decreased to –0.6% from 7.3% in the previous year. Earnings after tax were –€1.4 (11.8) billion.

In 2015, the Automotive Division’s return on investment declined sharply—mainly due to the special items. It fell from 14.9% to –0.2% in the reporting period. In the Financial Services Division, the return on equity before tax decreased slightly from 12.5% to 12.2% last year. This was largely due to tougher regulatory capital requirements and the associated higher equity.

Net cash flow in the Automotive Division increased by €2.8 billion in 2015 to €8.9 billion. Net liquidity in the Automotive Division rose to €24.5 (17.6) billion. The ratio of capex to sales revenue in the Automotive Division edged up 0.5 percentage points in 2015 to 6.9%. This means that Volkswagen is still within the expected range. Apart from investing in its manufacturing facilities, Volkswagen mainly invested in the electrification of the drive system, the expansion and environmental aspects of the model range and the modular toolkits.

Brands and Business Fields. The Volkswagen Passenger Cars brand generated sales revenue of €106.2 (99.8) billion in 2015, an increase of 6.5% year-on-year. Positive effects from exchange rates and from the efficiency program were unable to compensate for negative effects arising from the markets in Brazil and Russia as well as from market support measures linked to the emissions issue. Operating profit before special items therefore fell to €2.1 (2.5) billion. The operating return on sales stood at 2.0 (2.5)%.

At €58.4 (53.8) billion, Audi’s sales revenue exceeded the prior-year figure by 8.6%. This was mainly due to the positive unit sales growth. Amounting to €5.1 (5.2) billion, the operating profit before special items was almost level with the previous year. The operating profit was boosted by the higher volume and exchange rate developments, while upfront investments in new products and technologies as well as the expansion of the international production network had a negative impact. The brand generated an operating return on sales of 8.8% (9.6). The diesel issue led to special items of €298 million. The financial key performance indicators for the Lamborghini and Ducati brands are included in the financial figures for the Audi brand.

ŠKODA’s sales revenue in 2015 was up 6.2% year-on-year at €12.5 (11.8) billion. Volume and mix effects as well as lower material costs and positive exchange rate effects lifted the operating profit to €915 (817) million. The operating return on sales increased to 7.3% (7.0).

In 2015, SEAT generated sales revenue of €8.6 (7.7) billion. The operating result showed a marked improvement, rising to €–10 (–127) million. This was primarily due to the higher sales volume, positive exchange rate effects and cost optimization.

In fiscal year 2015, Bentley generated sales revenue of €1.9 billion, up 10.9% on the prior-year figure. Operating profit nevertheless decreased by 34.9% to €110 million. Positive exchange rate effects and cost reductions were unable to compensate for the impact of lower volumes and increased upfront expenditures for new products. The brand’s operating return on sales was 5.7% (9.7).

At €21.5 (17.2) billion, Porsche sales revenue exceeded the prior-year figure by 25.2%. Operating profit also improved by 25.2% to €3.4 (2.7) billion. Stringent income and cost management helped to counteract the negative effects from the changes in the mix, increased structural costs and higher development costs for future projects and technologies, and kept the operating return on sales stable year-on-year at 15.8%.

The sales revenue of Volkswagen Commercial Vehicles rose to €10.3 (9.6) billion in 2015. Positive effects from the increase in unit sales and improvements in exchange rates were offset by higher expenditures for renewing the product range, leading operating profit before special items to decrease by 24.2% to €382 million.

In the past fiscal year, global demand for trucks and buses was well below the previous year’s level. Scania generated sales revenue of €10.5 (10.4) billion in this environment. Operating profit rose to €1,027 (€955) million. The expansion of the service business had a positive effect, as did exchange rates. MAN generated sales revenue of €13.7 (14.3) billion and an operating profit before special items of €277 (384) million.

Volkswagen Financial Services continued its growth trajectory and again achieved a record result in fiscal year 2015. This was aided by close cooperation with Volkswagen Group brands, growth in existing markets and the expansion of its international presence. Operating profit at Volkswagen Financial Services grew by 12.9% year-on-year to €1.9 billion. The division signed 5.2 million new financing, leasing and service/insurance contracts worldwide, an increase of 2.8% year-on-year.

Prospects for 2016. The Volkswagen Group started 2016 with more upbeat unit sales figures. In the first three months of the year, 2.5 million vehicles were delivered to customers, an increase of 0.8% over the prior-year period. With the exception of Volkswagen Passenger Cars, all brands increased their deliveries in the first quarter, in some cases substantially. Regional performance varied greatly, as expected. For example, Russia and Brazil remain problematic for all car manufacturers. In spite of the diesel issue, the decline in unit sales in the United States has been kept in check on the whole, largely due to the sustained success of Audi and Porsche.

Contrasting with the trend in the United States, vehicle sales in Europe and Asia-Pacific were very solid in the first quarter of 2016. In China, the Volkswagen Group started the year on its strongest footing since entering the market over 30 years ago. The Group expects that, on the whole, deliveries in 2016 will be on a level with the previous year amid persistently challenging market conditions, with a growing volume in China.

Aside from the emissions issue, the highly competitive environment as well as interest rate and exchange rate volatility and fluctuations in raw materials prices all pose challenges. Positive effects are expected from the efficiency programs implemented by all brands and from the modular toolkits.

Depending on the economic conditions—particularly in South America and Russia—the exchange rate development, and in light of the emissions issue, the Board of Management estimates that 2016 sales revenue for the Volkswagen Group may be down by as much as 5% on the prior-year figure. In terms of the Group’s operating profit, the Board of Management anticipates an operating return on sales of between 5.0 and 6.0% in 2016. In the Passenger Cars Business Area the Volkswagen Group expects a sharp decrease in sales revenue, with an operating return on sales in the range of 5.5 to 6.5%. With sales revenue in the Commercial Vehicles Business Area likely to remain essentially unchanged, the operating return on sales should be between 2.0 and 4.0%. For the Financial Services Division, sales revenue and an operating profit at the prior-year level are expected.