The result of half year in 2021

According to its Investor Relations page, Volkswagen shared the half yearly financial report in 2021. In fact, the results are very positive and impressive. For example, sales revenue is 129.7 billion EUR and this number is 34.9% increase year by year. Another example is that operating profit is 11.4 billion EUR, which is increased by 12.8 billion from the last year.

However, its share price is less increasing than its rivals including Daimler, BMW, Toyota and General Motors. Therefore, there are several reasons why the stock market does not evaluate Volkswagen’s results positively. One reason is that Volkswagen’s operating margin is relatively low compared to its competitors such as Toyota and BMW. To be more specific, Volkswagen’s operating margin in the period is 9%. However, the number in Toyota and BMW is 12.6% and 14%, respectively.

When it comes to Return On Assets (ROA), the number in Volkswagen is 3.5%, but that in Toyota is 5%. Therefore, Volkswagen seems not to make use of its assets well and to turn them into profit. Even though the German automotive giant realizes good results in terms of sales revenue and operating profit, it’s not enough.

Struggle in “Volkswagen” brand

Furthermore, profitability among each brand is totally different and there is a huge gap between Volkswagen brand and others. In fact, the profitability in high end brands is really high. For instance, operating margin in “Porsche”, “Bentley” and “Audi” brand is 17.6%, 13.4% and 10.7%, respectively. However, the number in “Volkswagen” brand is only 4.4%. Even though high end brands account for 20% of total delivery, they earn more than half of total profit.

In this sense, there are rooms for improvement of “Volkswagen” brand. What’s more, about 40% of Volkswagen’s total delivery is in China. From 2010 to 2015, the number was increasing by 15%, but it became 2% from 2015 to 2020. In addition, China is one of the most important and biggest Electric Vehicles (EVs) market.

As for EVs, other high end models like Tesla and low end models such as SAIC-GM-Wuling Automobile (SGMW) are popular there. For example, SGMW and Tesla sold about 180K and 160K vehicles respectively in the first half of 2021. On the other hand, Volkswagen sold more than 10K EVs in China in the same period.


Of course, Volkswagen understands the situation now and take several actions to improve it. The German automotive giant held “Power Day” in March, 2021 and explained its plan to produce batteries. In Europe alone, the Group is planning to build six gigafactories by 2030. Their capacity will reach 240 GWh as a whole.

Battery production is not easy and needs time and money, but it is necessary. If Volkswagen makes its EVs more affordable and available, more middle income class will purchase them. In fact, the European Union has already proposed effective ban for new fossil-fuel cars from 2035. Or major cities including Paris declared the similar policy to make it greener.

Therefore, more economic EVs are needed for our society and it is main business area for Volkswagen. If the German company restores its good reputation in this area, it would have good effect on its share price as well.