SAMPLE COPY The World’s Car Manufacturers 7th Edition An operating and financial review

Transcription

The World’s Car Manufacturers
7th Edition
An operating and financial review
By Jonathan Storey
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The World’s Car Manufacturers
A strategic review of
finance and operations
2003 Edition
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THE AUTHOR
Jonathan Storey has worked in the motor industry for more than 15 years. Beginning as a financial analyst for Ford
Motor Company, he later moved into the consultancy sector, providing research, analysis and forecasting services to
vehicle manufacturers, suppliers and regulatory authorities. He is editor of Automotive World's Automotive
Quarterly Review and co-author of the sister publication The World’s Truck Manufacturers 7th Edition.
Acknowledgements
The author would like to express his thanks to all vehicle manufacturers that provided information for this report.
Copyright © 2003 Synesis Media Ltd.
This work may not be photocopied or otherwise reproduced within the terms of any licence granted by the
Copyright Licensing Agency Ltd or the Publishers Licensing Society Ltd.
This Management Report may not be reproduced in any form or for any purpose without the prior knowledge and
consent of the publisher.
The views expressed in this report are not necessarily those of the publisher. While information, advice or comment
is believed to be correct at the time of going to press, the publisher cannot accept any responsibility for its
completeness or accuracy.
Printed and bound in Great Britain by IKON Office Solutions, London Document Services, 37–42 Compton Street,
London EC1V 0AP.
ii
LIST OF CONTENTS
List of contents ......................................................................................................................................................................................................................iii
Preface................................................................................................................................................................... ix
Chapter 1:
Performance comparisons..............................................................................................................1
Introduction............................................................................................................................................................................................................................ 1
Global demand....................................................................................................................................................................................................................... 1
Aggregate sales & operating profit....................................................................................................................................................................................... 4
Aggregate revenue.................................................................................................................................................................................................................. 5
Average unit revenue by manufacturer 2002 ...................................................................................................................................................................... 6
Manufacturer operating margins .......................................................................................................................................................................................... 8
Cash holdings ......................................................................................................................................................................................................................... 9
Revenue per employee ........................................................................................................................................................................................................ 10
Production per employee West European carmakers ..................................................................................................................................................... 11
Industry structure................................................................................................................................................................................................................. 13
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Chapter 2:
BMW Group .................................................................................................................................. 14
Overview............................................................................................................................................................................................................................... 14
Recent performance............................................................................................................................................................................................................. 14
Business structure ................................................................................................................................................................................................................ 17
Markets & Models................................................................................................................................................................................................................ 20
Production ............................................................................................................................................................................................................................ 21
Notes on financial statistics ................................................................................................................................................................................................ 22
Chapter 3:
DaimlerChrysler............................................................................................................................24
Overview............................................................................................................................................................................................................................... 24
Markets & Models................................................................................................................................................................................................................ 30
Production ............................................................................................................................................................................................................................ 31
Chapter 4:
Fiat Auto........................................................................................................................................37
Overview............................................................................................................................................................................................................................... 37
Markets & Models................................................................................................................................................................................................................ 44
Production ............................................................................................................................................................................................................................ 45
Chapter 5:
Ford................................................................................................................................................48
Overview............................................................................................................................................................................................................................... 48
Markets & Models................................................................................................................................................................................................................ 55
Production ............................................................................................................................................................................................................................ 56
Chapter 6:
Fuji Heavy Industries (Subaru.....................................................................................................62
Overview............................................................................................................................................................................................................................... 62
Markets & Models................................................................................................................................................................................................................ 65
Production ............................................................................................................................................................................................................................ 67
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Chapter 7:
General Motors .............................................................................................................................69
Overview............................................................................................................................................................................................................................... 69
Markets & Models................................................................................................................................................................................................................ 75
iii
Production ............................................................................................................................................................................................................................ 76
Chapter 8:
GM Daewoo Auto & Technology ................................................................................................80
Overview............................................................................................................................................................................................................................... 80
Markets & Models................................................................................................................................................................................................................ 83
Production ............................................................................................................................................................................................................................ 84
Chapter 9:
Honda............................................................................................................................................85
Overview............................................................................................................................................................................................................................... 85
Markets & Models................................................................................................................................................................................................................ 89
Production ............................................................................................................................................................................................................................ 90
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Chapter 10:
Hyundai motor.............................................................................................................................93
Overview............................................................................................................................................................................................................................... 93
Markets & Models................................................................................................................................................................................................................ 96
Production ............................................................................................................................................................................................................................ 99
Notes on financial statistics .............................................................................................................................................................................................. 100
Chapter 11:
Isuzu Motors .............................................................................................................................. 101
Overview............................................................................................................................................................................................................................. 101
Recent Performance .......................................................................................................................................................................................................... 101
Business structure .............................................................................................................................................................................................................. 103
Markets and models........................................................................................................................................................................................................... 105
Production .......................................................................................................................................................................................................................... 106
Notes on Financial Statistics............................................................................................................................................................................................. 107
Chapter 12:
Mazda .......................................................................................................................................... 108
Overview............................................................................................................................................................................................................................. 108
Recent performance........................................................................................................................................................................................................... 109
Markets & Models.............................................................................................................................................................................................................. 111
Production .......................................................................................................................................................................................................................... 113
Chapter 13:
MG Rover Group ....................................................................................................................... 116
Overview............................................................................................................................................................................................................................. 116
Markets & Models.............................................................................................................................................................................................................. 118
Production .......................................................................................................................................................................................................................... 118
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Chapter 14:
Mitsubishi Motors ...................................................................................................................... 120
Overview............................................................................................................................................................................................................................. 120
Markets & Models.............................................................................................................................................................................................................. 124
Production .......................................................................................................................................................................................................................... 126
Chapter 15:
Nissan.......................................................................................................................................... 129
Overview............................................................................................................................................................................................................................. 129
Markets & Models.............................................................................................................................................................................................................. 133
iv
Production .......................................................................................................................................................................................................................... 134
Chapter 16:
Porsche ....................................................................................................................................... 136
Overview............................................................................................................................................................................................................................. 137
Markets & Models.............................................................................................................................................................................................................. 140
Production .......................................................................................................................................................................................................................... 140
Chapter 17:
Proton .......................................................................................................................................... 142
Overview............................................................................................................................................................................................................................. 142
Markets & Models.............................................................................................................................................................................................................. 145
Production .......................................................................................................................................................................................................................... 146
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Chapter 18:
PSA Peugeot Citroën .................................................................................................................. 148
Overview............................................................................................................................................................................................................................. 148
Markets & Models.............................................................................................................................................................................................................. 154
Production .......................................................................................................................................................................................................................... 156
Chapter 19:
Renault Automobile.................................................................................................................... 157
Overview............................................................................................................................................................................................................................. 158
Markets & Models.............................................................................................................................................................................................................. 164
Production .......................................................................................................................................................................................................................... 165
Chapter 20:
Suzuki ..................................................................................................................................... 168
Overview............................................................................................................................................................................................................................. 168
Markets & Models.............................................................................................................................................................................................................. 173
Production .......................................................................................................................................................................................................................... 173
Chapter 21:
Toyota..................................................................................................................................... 176
Overview............................................................................................................................................................................................................................. 176
Markets & Models.............................................................................................................................................................................................................. 180
Production .......................................................................................................................................................................................................................... 183
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Chapter 22:
VW Group ............................................................................................................................... 186
Overview............................................................................................................................................................................................................................. 186
Markets & Models.............................................................................................................................................................................................................. 191
Production .......................................................................................................................................................................................................................... 194
Chapter 23:
Methodology & exchange rates ............................................................................................ 197
Spreadsheet structure......................................................................................................................................................................................................... 197
Glossary of financial statistics .......................................................................................................................................................................................... 198
Performance ratios............................................................................................................................................................................................................. 200
Exchange rates ................................................................................................................................................................................................................... 202
v
List of figures
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World car demand
Monthly new car registrations, worldwide(1) 2001-2003
Aggregate unit sales & operating profit of the major carmakers
Aggregate revenue - W. European, Japanese & US carmakers
Average unit revenue by manufacturer, 2002
Manufacturer operating margins - simple average, 1983-2002
Manufacturer operating margins - simple average, 1998-2002
Cash holdings as at September 2003
Revenue per employee 1983 & 2002 (€)
Production per employee, west European carmakers
Industry structure - 2002 car & LCV sales by group*
Industry structure - 1989 car & LCV sales by group
Latest results - BMW
BMW net profit trend
BMW revenue & pre-tax profit trend
BMW Group revenue by division (%)
BMW Group PBT by division (€m)
BMW customer deliveries by market
BMW production by model & model plans
Latest results - DaimlerChrysler
DC car divisions) revenue and operating profit trend
DC net profit trend
DC revenue by division
DC unit sales by market (000s)
DC production by model & model plans
Alfa Romeo & Lancia sales
Latest results - Fiat Group
Fiat Auto revenue & operating profit trend
Fiat Auto net profit trend
Fiat Group revenue by division (%)
Fiat Auto unit sales (000s)
Fiat Auto production by model & model plans
Latest results - Ford
Ford Auto revenue & operating profit trend
Ford Automotive net profit
Ford Europe net profit
Ford revenue & net profit by division ($m)
Ford Group, factory sales by market (000s)
Ford Europe, unit sales by market
Ford Europe production by model & model plans
Latest results - FHI
FHI revenue & operating profit trend
FHI net profit trend
FHI revenue by division (%)
Subaru unit sales by market
Subaru production by model & model plans
Latest results - GM
GM Europe revenue & net profit trend
GM net profit trend
GM net income by division ($m)
GM unit sales by region (000s)
New car registrations by market, GM brands, western Europe
GM Europe production by model & model plans
Latest results - Daewoo Motor
DM revenue trend
DM net profit trend
Daewoo Motor unit sales
Daewoo production by model and model plans
Latest results - Honda
Honda Automobile revenue & operating profit trend
Honda net profit trend
Honda revenue & operating profit by division (¥bn)
Honda unit sales by market (000s)
Honda production by model & model plan
Latest results - Hyundai Motor
Hyundai Motors revenue & operating profit trend
Hyundai Motor net profit trend
Hyundai & Kia unit sales by market
Hyundai and Kia production by model & model plans
Latest results - Isuzu
Isuzu revenue & operating profit trend
Isuzu net profit trend
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Isuzu unit sales by region
Isuzu production by model & model plans
Latest results - Mazda
Mazda revenue & operating profit trend
Mazda net profit trend
Mazda unit sales by market
Mazda production by model & model plans
Latest results - MG Rover
MG Rover production & product plans
Latest results - MMC
MMC revenue & operating profit trend
MMC net profit trend
Mitsubishi unit sales by market (000s)
Mitsubishi production by model & model plans
Latest results - Nissan
Nissan revenue & operating profit trend
Nissan net profit trend
Nissan unit sales by market
Nissan production by model & model plans
Latest results - Porsche
Porsche revenue & operating profit trend
Porsche net profit trend (€)
Porsche Group revenue by division (%)
Porsche unit sales by market
Porsche production by model & model plans
Latest results - Proton
Proton revenue & pre-tax profit trend
Proton unit sales by market (including Lotus)
Unit sales in western Europe, Proton, Daewoo, Hyundai & Kia brands
Latest results - PSA
PSA revenue & operating profit trend
PSA net profit trend (€)
PSA revenue by division (%)
PSA unit sales by market (000s)
PSA production by model & model plans
Latest results - Renault
Renault Auto revenue & operating profit trend
Renault Group net profit trend
Renault Group revenue & operating profit by division (%)
Renault Auto unit sales by market
Renault Auto production by model & model plans
Latest results - Suzuki
Suzuki revenue & operating profit trend
Suzuki net profit trend
Suzuki revenue by division (%)
Suzuki new car registrations by market
Suzuki production by model & model plans
Latest results - Toyota
Toyota revenue & operating profit trend
Toyota net profit trend
Toyota unit sales by market
Toyota production by model & model plans
Latest results - VW
VW revenue & operating profit trend
VW net profit trend (€)
VW Group revenue by division (%)
VW unit sales by market
VW production by model & model plans
Spreadsheet structure
Spreadsheet structure
Exchange rates - units of currency per euro
Value of export earnings in foreign currency
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Appendix 1 (on disk):
Financial statistics and performance ratios by manufacturer (euro)
BMW Group
Ford Werke
Mitsubishi Motors
BMW – Rover Group
Ford - Volvo Cars
Mitsubishi Automobile
BMW AG
Fuji Heavy Industries (consolidated)
Nissan
Daewoo Motor
Fuji Heavy Industries (nonconsolidated)
Porsche
DaimlerChrysler Group
General Motors
DaimlerChrysler Auto
DC – Daimler-Benz (Passenger Cars)
DC – Daimler-Benz (Automotive)
Proton
PSA Peugeot Citroën
GM Automotive
PSA Automobile
GM (GMAC on equity basis)
GM Saab Automobile
Renault Group
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DC – Daimler-Benz Group
DC – Chrysler Corporation
DC – Chrysler Automobile
DC – Chrysler (CFC on equity basis)
Honda
Hyundai non-consolidated
DC - M-Benz cars
Hyundai – Kia Motors
Fiat Group
Isuzu (non-consolidated)
Fiat Auto
Isuzu (consolidated)
Ford Worldwide
Mazda (consolidated)
Ford Automotive
Mazda (non-consolidated)
Ford Europe
MG Rover
Ford UK
Companies/entities same as Appendix 1
World assembly plants
Exchange rates
Suzuki consolidated
Toyota
Toyota – Daihatsu
Volvo Group
Volvo Car
VW Group
VW Automotive
VW – Audi
VW – Seat
VW – Skoda
Financial statistics by manufacturer (native currency)
Renault Automobile
Suzuki non-consolidated
Honda Automobile
Hyundai consolidated
DC - M-Benz group
GM Daewoo Auto & Technology
viii
PREFACE
Welcome to the seventh edition of The World’s Car Manufacturers. I would like to thank all subscribers to the first six
editions, not only for subscribing but also for the positive feedback and helpful suggestions for future editions.
About this report
The primary objective of the report is to provide comprehensive and consistent information on the financial and
operating performances of the world’s major car producers. This information is complemented by analysis and
commentary, which both highlights the pertinent aspects of the wealth of data included, and provides a guide to
some of the pitfalls encountered when interpreting the data.
The backbone of the report is the appended database of financial statistics and performance ratios covering all the
world’s major car manufacturers and their subsidiaries from 1983 onwards. This comprehensive database is designed
to present information in a clear and consistent format, to enable users to analyse and compare the operating
performances of a wide range of automotive companies over a statistically significant period.
Using these financial statistics, the first chapter of the report contains a series of comparisons between the major
carmakers and some illustrations of activity of the industry at an aggregate level.
This is followed by individual profiles of all the manufacturers studied, including:
recent performance;
•
•
business structure;
•
new model plans;
•
key markets;
•
capacity expansion plans;
•
production by model;
•
revenue and profit forecasts;
•
commentary and analysis.
I hope you will find the report meets my aims and your expectations.
Jonathan Storey
ix
CHAPTER 1:
PERFORMANCE COMPARISONS
Among the manufacturers all of the European groups
saw a decline in their new car registrations over the
first ten months, with a few individual brands (Seat,
Skoda, Citroën, Saab, Smart and Mini) showing an
improvement.
INTRODUCTION
This chapter provides a series of snapshots of the
world’s automotive industry - its size, profitability, the
numbers employed and other operational data.
Fiat Group remained the worst performer over the
first ten months with a 10.7% drop in new car
registrations and its market share dropped by 0.8pts
to 7.4%. The Fiat brand was the worst affected with a
drop in new registrations of 11.9% and a 0.6pts fall in
market share to 5.6%.
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The charts are mostly compiled from the database
that accompanies this report and they not only
provide some interesting perspectives on the way the
industry and its key players are developing, but also
illustrate some of the uses to which the database can
be put.
Fiat Group’s share of the west European car market
excluding Italy was just 4.0% in 2002 and is heading
for 3.6% in 2003. This would be a lower share than
Toyota.
GLOBAL DEMAND
2002
Global car demand increased marginally during 2002
to just over 49m units. Continuing weakness in
western Europe, Nafta and South America was offset
by growth in other regions, particularly a surge in
demand in non-Japan Asia where car sales rose by
over 20% to 4.3m units.
Among the major groups, Ford's performance was
the next weakest. New registrations of its vehicles
dropped by 4.3% to 1.35m units as the Focus entered
its runout phase and the Mondeo suffered from the
increasing switch to premium brands.
VW Group also underperformed the West European
market, with a 3.2% drop in new registrations as
falling demand for VW and Audi branded models
was partly offset by a small rise in demand for Seat
and Skoda. Demand for the VW brand is of course
expected to revive now the Golf has been launched.
In a typical year the Golf accounts for about28% of
the group's car sales in western Europe and about
47% of the VW brand's sales.
2003
The pattern of demand in 2003 is expected to have
been very similar, with growth in Asia, Eastern
Europe, the Middle East, Oceania, Africa and
(marginally) Japan, being mostly offset by declines in
western Europe, Nafta and South America.
Western Europe
PSA and Renault both saw their sales decline over the
first ten months but Renault's sales have been picking
up in the latter part of the year as the rolling launch
of the seven Mégane variants nears its end.
New car registrations fell by 1.3% in the first ten
months of the year and are expected to end the year
2.4% down.
Among the major markets, France has been the worst
performer with a drop of 6.7% over the first ten
months and a similar drop expected over the full year.
Demand in Germany has been on the brink of
recovering for some months, but like the wider
economy the market continues to stagnate. The
launch of the new Golf in October should improve
demand in the final months of the year, leaving the
full year figure close to its 2002 level.
Collectively the Japanese carmakers outperformed the
European market with a rise in new registrations of
9% over the first ten months, led by Mazda with a
32% rise. Mitsubishi was the only brand to see a
decline and the drop of 0.8% still outperformed the
market.
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The increase was attributable to a combination of
new models, wider availability of diesel engines and a
more favourable exchange rate.
Italy, Spain and the UK all showed an increase in new
registrations over the first ten months of the year.
The Italian market is expected to turn down in the
final two months due to the non-recurrence of an
incentive scheme which boosted the prior year
results.
1
CHAPTER 22:
VW GROUP
In 1999 profit dropped again before improving
significantly in 2000 and 2001 but the company still
remained substantially short of its own performance
target. The results for 2002 showed a significant
decline, with weak demand in Germany being one of
the major problems.
OVERVIEW
The VW Group is the largest producer of vehicles in
Europe in terms of unit sales, though both BMW and
DaimlerChrysler are larger in terms of market
capitalisation. Globally, VW is the fourth largest
producer with an output of 5.0m cars and
commercial vehicles in 2002.
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This, since setting its target for a minimum pre-tax
margin of 6.5% in 1997, the closest the company has
got is 5.0% in 2001.
The group has grown to its present size partly by
acquisition, buying Auto-Union and NSU in the
1960s, Seat in 1986, Skoda in 1991 and three luxury
marques: Bugatti, Lamborghini and Rolls Royce, in
1998. The non-VW brands accounted for 34% of
VW's worldwide car production in 2002.
Although the platform policy achieved some
substantial scale economies, VW is widely perceived
to have suffered from a lack of clarity and flexibility
in its approach to new model development. This has
had two broad consequences. First, insufficient
differentiation between the brands and between some
models in particular, means there has been a
cannibalisation effect, with models from one of the
four core brands taking sales from the others, rather
than competitor models.
The acquisition of Seat and Skoda enabled the VW
Group to establish a clear sales lead in the western
European market during the late 1980s and early
1990s, a position reinforced by the surge in domestic
sales due to the German reunification boom.
However, in profit terms the group was unable to
capitalise on the booming demand in the way most of
its competitors did. VW’s operating income declined
in all but two years from 1985 to 1993 as it struggled
to cope with excessive production costs, overambitious capacity expansion plans, and losses at
Seat. The group made operating losses in 1992, 1993
and 1994. Some indication of the company’s
problems can be taken from the fact that in 1992 its
breakeven production volume was quoted as being in
excess of 100% of capacity.
Second, despite (or perhaps because of) this excess of
models within some segments, VW has been notably
slow in developing models for newly emerging
market segments. For example, despite having a
significant presence in North America, VW sells no
light trucks there, so has missed out on the booming
demand in that sector. In Europe it has only recently
launched a Mégane Scénic competitor, nearly seven
years after Renault launched the Scenic and several
years after GM and PSA (among others) entered the
sector with the Zafira and Xsara Picasso. This sector
alone now accounts for about 1m units per annum.
With this background, it is no surprise that much of
VW’s activity during the 1990s was directed towards
reducing costs, returning Seat and Skoda to profitable
growth and developing an integrated group structure
to enable its four principal marques to play to their
strengths in the market, while maximising the scale
economy benefits in areas such as development,
purchasing and production. Central to this was VW's
'platform policy', the plan to produce all the core
models on four platforms - not a new idea but a more
intense application of an old one than had previously
been tried.
The company has recognised these problems. Under
its new chairman, Bernd Pischetsrieder, who formally
took over from Ferdinand Piëch during 2002, the car
business has been split in two, with Audi heading a
new "sporty" division which includes Seat and
Lamborghini. The remaining brands (VW, Skoda,
Bentley and Bugatti) are in a division headed by VW.
The "sporty" division is in some ways analogous to
Ford's Premier Automotive Group but clearly VW is
dividing along vehicle dynamic characteristics rather
than simply on price.
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One aim of the brand restructuring is to reduce
product overlap. Another is to make the product
policy more market-led than manufacturing-led. Mr
Pischetsrieder believes that the emphasis given to the
platform policy has led VW to miss out on emerging
niches, such as those mentioned above.
With this plan successfully implemented, the
expectation was that VW's lacklustre profits would
improve strongly. In 1997 the company set itself a
'medium-term target of at least 6.5%' for its pre-tax
return on sales which compared with a 15-year
average of 2.3% and peak of 5.2%. This target looked
achievable as pre-tax earnings grew, from a low base,
by 95% and 63% in 1997 and 1998 respectively. But
then VW seemed to run out of steam.
186
Figure 126: Latest results - VW
C urre ncy
/ Unit
VW Group
Revenue
January - September
2002
2003 (%)
€(m)
- Automotive
- Finance
€(m)
Operating profit
Of which:
- Automotive
- Finance
Automotive op. margin
€(m)
percent
Net profit
Net margin
percent
Of which:
€(m)
65,269
58,327
6,942
64,112
56,348
7,764
3,714
3,127
587
5.4
1,730
980
750
1.7
1,842
2.8
813
1.3
3,756.0
2,634.0
913.0
209.0
3,710.0
2,588.0
931.0
191.0
Year to December
2001
2002 (%)
(1.8)
(3.4)
11.8
88,540
80,072
8,468
86,948
77,503
9,445
(53.4)
(68.7)
27.8
(3.6) pts
5,424
4,872
552
6.1
4,761
4,040
721
5.2
(12.2)
(17.1)
30.6
(0.9) pts
(55.9)
(1.6) pts
2,926
3.3
2,597
3.0
(11.2)
(0.3) pts
5,080.1
3,566.2
1,214.0
299.8
4,984.0
3,501.5
1,202.6
279.9
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€(m)
€(m)
€(m)
Customer deliveries
000s
Of which:
000s
- VW brand grp *
- Audi brand grp*
000s
- CVs
000s
(1.2)
(1.7)
2.0
(8.6)
(1.8)
(3.2)
11.5
(1.9)
(1.8)
(0.9)
(6.6)
* VW brand group comprises: VW, Skoda, Bugatti and Bentley
* Audi brand group comprises: Audi, Seat & Lamborghini
Figure 127: VW revenue & operating profit trend
1,200
1,100
Revenue (€)
1,000
Op. Profit (€)
900
Index (1983 = 100)
800
700
600
500
400
300
200
100
2002
2001
2003 (e)
-200
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
0
-100
-300
We agree. He considers that the current model range
only covers 65% of the market, whereas he believes a
global manufacturer such as VW should cover around
85%.
•
its best-selling model, the Golf in its runout year;
•
the appreciation of the euro against the dollar
lowering the value of export sales."
SAMPLE COPY
Sure enough VW's profit plummeted by 56% during
the first nine months of the year.
It is encouraging to hear this sort of thinking at the
company and the fresh approach to product planning
should start to pay dividends in two to three years.
While its performance should improve in 2004 as it
benefits from the new Golf, launched in October, it
will still face difficulties with the exchange rate and it
is not clear that it has reduced its cost base
sufficiently to outperform its principal European
rivals.
Last year's edition of this report observed that:
"VW faces the prospect of 2003 with the unhappy
combination of:
• demand in Germany still being weak;
187
Figure 128: VW net profit trend (€)
3,500
3,000
2,000
SAMPLE COPY
1,500
1,000
500
2003 (e)
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
-500
1984
0
1983
Index (1983 = minus 100)
2,500
-1,000
-1,500
•
RECENT PERFORMANCE
€33m to €3,365m.
These falls were partly offset by an increase of €62m
to €469m in Asia-Pacific. This latter figure does not
include the contribution from VW’s Chinese
operations which are not consolidated in the group
results.
2002 results
Over the full year VW’s revenue dropped by 1.8% to
€86.9bn as a 3.2% fall in the automotive division’s
contribution was partly offset by an 11.5% rise in the
financial services division. The decline in automotive
revenue reflected a 2.2% drop in vehicle wholesales
to 4,996,179 units. China, Great Britain and Mexico
were the only significant markets where the group’s
sales improved during the year.
Pre-tax profit was €3,986m, a decline of 9.6% from
the 2001 result of €4,409m. The company’s pre-tax
margin of 4.6% was 0.3pts below the 2001 figure.
The profit decline was limited by a 24% drop in
finance costs to €775m from €1,015m. That
reduction was almost entirely due to the €245m
increase in the contribution from subsidiaries and
joint ventures to €534m, most of which was
presumably attributable to VW’s Chinese ventures.
The automotive division’s gross profit dropped by
1.5% to €12,760m, a gross margin of 14.7% (based
on the group revenue figure) compared with 14.6% a
year earlier. The margin increase reflected efficiency
improvements (about €1bn was taken out of the cost
base) and a rise in the operating lease business. The
improvement came despite an 8.7% increase in R&D
expense to €2.89bn or 3.7% of automotive revenue
compared with 3.3% in 2001. The financial services
division gross profit fell by 6.8% to €1.24bn.
VW is keen to point out that this represents its
second highest pre-tax result, but as they have
published only three years’ worth of results according
to International Accounting Standards, the claim does
not amount to much. However, given the subdued
conditions in many of VW’s core markets and the
fact that VW was at a weak point in its model cycle,
with the Golf and Passat in their final and
penultimate years respectively, this was not a bad
performance.
SAMPLE COPY
Group operating profit dropped by 12.2% to
€4.76bn, a margin of 5.47% compared with 6.1% a
year ago. The decline was more marked than that of
gross profit because distribution costs of €7.56bn
(2001: €7.55bn) and administrative costs of €2.15bn
(€2.15bn) were virtually unchanged in absolute terms
but increased as a proportion of revenue as VW was
forced to increase sales incentives in the US and
Europe.
The divisional results were as follows:
On a geographical basis, the €663m decrease in
operating profit reflected falls of:
• €377m to €1,287m in Nafta;
•
€314m to a loss of €359m in South America;
188
!
The Volkswagen brand group reported a 5.4%
drop in revenue to €46.7bn and an 18% drop in
operating profit to €2.46bn. The operating
margin dropped by 0.8pts to 5.3%.
!
The Audi brand group reported a 1.6% rise in
revenue to €25.4bn and a 6.7% drop in operating
profit to €1.36bn. The operating margin dropped
by 0.5pts to 5.3%.
!
The CV division reported a 2.9% drop in
revenue to €4.9bn and a 54% drop in operating
profit to €156m. The operating margin dropped
by 3.6pts to 3.2%.
It seems extremely poor management not to have
made better hedging arrangements previously. The
weak euro gave a boost to many of Europe's
exporters but most observers agreed it would not last.
SAMPLE COPY
January - September 2003
Revenue fell by 1.8% to €64.1bn during the first nine
months. The decline was almost wholly attributable
to the VW brand group which saw a 7% fall due to
lower sales and exchange rate effects. The other main
divisions contributed higher revenues than a year ago.
Furthermore, it is worrying to think that VW's profits
in the past two years have been substantially boosted
by the weak euro but even with this significant
following wind the company has been unable to meet
its profit objectives during those years.
In the region which VW classes as ‘Europe / Rest of
the world’ the adverse effect of lower sales and (in
non-eurozone markets) the stronger euro, was more
than offset by a richer model mix helping revenue to
grow by 1.4% to €45.77bn.
!
In North America the adverse exchange rate
movement combined with a 6.3% fall in customer
deliveries led to an 18.4%drop in revenue to €10.8bn.
The Volkswagen brand group was the worst
performer, reporting an 7% drop in revenue to
€33.1bn and an 81% drop in operating profit to
€388m. Most of the new model launches this
year are VW brand models, most notably of
course the new Golf.
!
In the rest of the world, gains in Asia-Pacific more
than offset a decline in South America, leaving
revenue 9% higher at €7.5bn.
The Audi brand group reported a 2.4% rise in
revenue to €19.4bn and a 5.3% drop in operating
profit to €814m.
!
The CV division reported a 3.6% rise in revenue
to €3.56bn and an operating loss of €152m
compared with a year-ago profit of €142m,
reflecting launch costs for the new generation
Multivan and Transporter.
!
The financial services division reported an 11.8%
rise in revenue to €7.76bn and a 27.8% increase
in operating profit to €750m.
Results by brand group were as follows:
Please note the figures for Asia-Pacific do not include
China. VW’s joint ventures in that country are
included on an equity basis therefore do not affect
the group revenue figures other than through the sale
of components to the ventures.
Group operating profit plummeted by 53.4% to
€1.73bn.
Full year outlook
VW should gain some benefit from the new Golf in
the final quarter of the year but the company
nevertheless expects its full year operating profit to
be only half the 2002 level.
Adverse exchange rate movements were the biggest
factor in the decline, reducing profit by €1.2bn. Startup costs, principally for the Golf, reduced profit by a
further €0.9bn. Lower sales and a weaker mix caused
a drop of €0.6bn. The result was also affected by
restructuring measures in Brazil which incurred a
non-recurring charge of €120m.
SAMPLE COPY
BUSINESS STRUCTURE
At a consolidated level, in 2002 sales of vehicles
accounted for 75.7% of group revenue and parts sales
for a further 6.2%.
These negative factors were partly offset by cost
reductions and other improvements.
The bulk of other revenue came from the leasing and
rental business.
In response to its exchange rate problems the
company has said it will use financial instruments to
hedge two-thirds of its currency exposure in future,
compared with 40% previously. In the longer term it
may look to achieve a more naturally hedged profile
by increasing its production in North America.
189
Figure 129: VW Group revenue by division (%)
Division
1996
1997
1998
1999
2000
2001
2002
VW Cars
45.6
43.6
46.0
44.9
44.0
42.6
40.0
VW CV's
Audi
Seat
Skoda
7.9
8.3
7.1
6.1
5.9
5.2
SAMPLE COPY
18.0
18.9
18.8
18.9
18.2
19.7
4.9
20.2
4.9
5.4
5.2
6.0
5.9
5.3
5.5
2.6
3.5
3.8
3.8
4.3
4.9
5.1
Spares
7.0
6.6
5.8
5.9
5.9
6.2
6.7
Fin. Services & Other
14.0
13.7
13.3
14.5
15.8
16.1
17.6
Total
100
100
100
100
100
100
100
Financial services division
The division was responsible for financing or leasing
35.7% of VW’s customer deliveries during 2002, up
from 30.7% a year earlier. Also during 2002 VW's
financial services division started to sell personal and
property insurance. It is co-operating with four
German insurers: Cosmos Direkt, HDI, Neue Leben
Lebensversicherung and Allianz; in order to offer
insurance in sectors such as accident, home, legal, life
and sickness.
The 'VW Law'
The European Commission has been examining the
so-called ‘VW law’ to see if it infringes EU
competition regulations. The VW law limits voting
rights at 20%, regardless of the amount of shares an
investor owns. The regional government of Lower
Saxony holds around 21% of the voting rights in
Volkswagen, giving it a special right to block major
company decisions. The 43-year-old law could breach
of EU rules because it gives the government of
Lower Saxony a veto on any takeover of the
company.
It is also planning to expand into business credits
outside its existing financing of automotive dealers. It
is hoping to target up to 50,000 existing customers of
its leasing services.
Executive pay
As part of a drive to improve investment efficiency
VW is restructuring executive pay. The company is to
base up to 40% of 2003's bonus on the achievement
of returns above the cost of capital. The introduction
of earnings value added (EVA) measures by Mr
Pischetsrieder and his new finance director, Mr
Pötsch, is designed to encourage managers to think
more like investors. In addition to the EVA
component, the new bonus structure will add group
performance measures to the individual and brand
measures already in place. This makes a clear
statement to all concerned that the group’s brands
need to work with each other, rather than competing.
In 2002 VW made a return on invested capital of
7.4%, less than its 7.7% cost of capital - equivalent to
destroying €134m ($146m) of value.
Product strategy committee
Following the adoption of its new brand strategy (see
opening comments) VW formed a new product
strategy committee (PSC). As its name indicates, the
PSC will review product development from a
strategic perspective, considering whether new
proposals are consistent with the newly defined
objective of greater differentiation between the
brands.
SAMPLE COPY
VW's much-vaunted platform policy has frequently
been criticised for the resulting lack of brand
differentiation and the amount of overlap between
various models. However, we would argue that such
problems are not an inevitable consequence of the
platform policy, the flaws of which have been more
to do with execution than with concept. The PSC
should help to address this concern.
Scania, MAN & VW Trucks
In March 2000 VW finally realised its ambition to
develop its heavy truck operations when it bought a
stake in Scania, following the European
Commission's blocking of Volvo's takeover. VW
bought 37.4m Scania A shares, representing 18.7% of
the company's capital and 34% of the voting rights.
The price of SKr370 per share (SKr13.8bn in total)
was higher than the SKr280 that VW offered to buy
Scania in 1999 and higher than the average SKr266
per share paid by Volvo which holds 30.6% of the
voting rights and 45.5% of the capital.
190
The move goes someway to satisfying VW's oftstated desire to develop a presence in the truck
industry although this publication questions the
wisdom of the move for at least two reasons.
During 2003 VW and DC have signed an agreement
for VW to supply turbo diesel engines to DC for use
in Chrysler’s and Mitsubishi’s European models. First
deliveries are scheduled for 2005 and the agreement
runs until 2013. Annual deliveries are expected to be
around 120,000 units.
First, VW paid top dollar for its stake at a time of
peak demand in the world's major truck markets.
Scania's share price is currently trading around
Skr200.
Audi / Maserati
In September 2003 Audi and Maserati signed a letter
of intent for several technical and commercial cooperation projects. The two firms plan joint
development and manufacturing of modules from
Volkswagen, Audi and Maserati models.
Second, the strategic rationale for the move is far
from clear. The performance of VW's car operations
remains below its publicly stated targets and while
this remains the case the company would surely do
better to concentrate its managerial and financial
resources on its core business rather than be
distracted by a business about which it knows
relatively little.
SAMPLE COPY
VW / Siemens
In March 2003 VW and Siemens’ automotive
division, Siemens VDO, announced a joint venture to
develop diesel injection technology. The two
companies will invest a total of €270m in the 50-50
venture, which will be known as Volkswagen
Mechatronic. The venture will be located in Stollberg
in the German state of Saxony. Construction of a
new factory for the venture will begin in May, with
first production targeted for Q4-2004. The project
will employ about 380 people in the first phase. This
will rise to 690 in a second phase, planned for 2007.
While there is often much to be said for refusing to
follow the latest management fashion, we believe VW
would do well to follow the examples of Ford, GM,
Renault, Saab-Scania and Volvo. These companies
have recognised that there are few synergy benefits in
maintaining a presence in both car and truck sectors
and unless both operations are of sufficient size to
compete successfully on a global basis, then better to
concentrate on one or the other.
VW has said in the past that it wanted a presence in
the truck sector to offer a cyclical counter-balance to
its car business. This is a weak argument, as the
demand for cars and trucks has followed fairly similar
patterns in North America and Europe over the past
ten years or so, which we find unsurprising. The only
noticeable difference is that the demand for trucks
shows more volatility, again unsurprising.
MARKETS & MODELS
2002
VW’s wholesales dropped by 2.2% in 2002 to
4,996,179 units. The Volkswagen brand group (VW
cars, Skoda, Bentley and Bugatti) accounted for
3.54m of these or 70.8% (2001: 70.6%). The Audi
brand group (Audi, Seat and Lamborghini) accounted
for 1.19m or 23.8%. Sales by the CV division fell by
9.8% to 267,000 units.
Looked at another way, over the last decade in which
Volvo cars and trucks were part of the same
company, the profits of the two division were nearly
always been heading in the same direction, albeit at
different speeds.
SAMPLE COPY
Customer deliveries in western Europe fell by 5.1%
to 2.827m units, reflecting falls of:
• 4.7% to 940,129 units in Germany;
Bernd Pischetsrieder, VW's new chairman, has not
appeared keen on keeping the stake in Scania,
acquired by his predecessor, Ferdinand Piëch. A sale
to Hino is suggested as a one way of achieving a
quick exit. If there is any substance to these rumours
then we would welcome it, having always been critical
of the investment in Scania.
•
9.8% to 314,522 units in Spain;
•
2.9% to 303,117 units in Italy;
•
8.6% to 256,827 units in France.
Deliveries in Great Britain rose by 7.9% to 332,274
units.
During 2003 rumours of a possible tie-up between
VW and MAN continued to circulate. Previous
editions of this report have pointed out the
disadvantages and illogicality of such a move and we
continue to hope that the rumours will prove to be
ill-founded. A focus on EVA should certainly steer
the company away from this idea.
In Eastern Europe deliveries fell by 1.8% to 322,266
vehicles, led by a 9.6% drop to 89,061 units in the
Czech Republic.
VW / DC
191
Figure 130: VW unit sales by market
Market
1996
1997
1998
1999
2001
2002
2003 (e)
986,813
19.4
940,129
18.9
937,200
18.9
657,394
12.7
669,494
13.2
663,278
13.3
621,400
12.5
490,281
10.0
534,557
10.4
555,266
10.9
477,473
9.6
410,600
8.3
330,650
6.7
338,252
6.6
348,744
6.9
314,522
6.3
329,000
6.6
Germany
Share of VW total (%)
969,361
24.3
N America
300,849
7.5
309,803
7.3
419,057
8.8
554,821
11.3
S. America (2)
752,237
18.8
738,530
17.4
587,280
12.4
Spain
202,713
5.1
232,706
5.5
277,808
5.9
2000
1,006,675 1,102,349 1,155,140 1,025,857
23.7
23.2
23.5
19.9
SAMPLE COPY
Italy
232,762
5.8
249,877
5.9
296,862
6.3
300,123
6.1
306,965
5.9
312,036
6.1
303,117
6.1
282,400
5.7
France
228,051
5.7
210,572
5.0
237,908
5.0
264,371
5.4
271,208
5.3
280,434
5.5
256,287
5.1
238,400
4.8
Great Britain
183,427
4.6
207,595
4.9
228,605
4.8
252,473
5.1
264,569
5.1
307,944
6.1
332,274
6.7
324,100
6.5
Other W. Europe
540,139
13.5
580,890
13.7
685,093
14.4
750,956
15.3
792,946
15.4
742,187
14.6
681,143
13.7
645,800
13.0
Other
584,773
14.6
713,766
16.8
912,856
19.2
824,181
16.7
969,440
18.8
877,169
17.3
Total
1,015,807 1,176,100
20.4
23.7
3,994,312 4,250,414 4,747,818 4,922,996 5,161,188 5,080,087 4,984,030 4,965,000
(1) Includes sales by non-consolidated subsidiaries: 165,000 in 95, 232,000 in 96, 280,000 in 97
& 309,000 in 98, 317,194 in 99 & 333,340 in 2000
(2) Also includes Africa from 1994
Nafta deliveries were 0.9% lower at 663,278 units as a
3.5% fall to 424,531 units in the US was mostly offset
by rises of 4.6% to 188,523 units in Mexico and 1.5%
to 50,224 units in Canada.
Distribution changes
The company has recently said it is planning to merge
the distribution of its different brands at the
wholesale level in a move expected to save several
hundred million euros. Distribution will be coordinated by the two marketing groups but the
company has stressed the changes will not be
apparent at the retail level and do not presage a
widespread move to multi-branded dealerships.
In South America VW’s deliveries fell by 14% to
477,473 units, with deliveries in Brazil dropping by
12.5% to 382,071 units.
Asia-Pacific was the main bright spot, with a 34.6%
increase in deliveries to 620,624 vehicles, most of
which were sold in the Chinese market where
deliveries increased by 42.8% to 512,548 vehicles.
It seems astonishing that the company has not
introduced such 'backroom' changes before. The
availability of such scale economies were the main
reason VW acquired Audi, Seat and Skoda in the first
place.
SAMPLE COPY
2003 YTD
In the first nine months of 2003 VW delivered
3,710,000 vehicles to its customers, down 1.2%. This
reflected falls of 3.5% in Europe, 6.3% in Nafta and
14.1% in South America / South Africa, partly offset
by a 26.8% rise in Asia Pacific.
Sales expansion
VW is aiming to lift its sales by more than 20% over
the next 3-4 years, with upwards of half the increase
coming from China, where the company expects its
sales to double from the 2002 level of just over 0.5m
units, by 2007. Five new models have been launched
in China during 2003 as part of a €6bn investment
programme.
Over the first ten months of the year new
registrations of VW cars in western Europe fell 3.2%
to 2,197,628 units and the group's market share
slipped from 18.4% to 18.0%.
In the US VW's sales over the first ten months fell by
9.5% to 326,300 units.
192
Figure 131: VW production by model & model plans
Mode l
Debut
C hange
2001
(2004-07)
Units
(%)
Units
(%)
Units
(%)
1.6
7.7
0.8
2.3
23.5
2.3
6.2
0.0
14.4
1.1
0.0
0.0
0.0
0.8
70,377
548,214
24,407
101,500
1,049,839
349,799
106,226
709,897
58,387
6,343
519
3,403
33,756
1.4
10.9
0.5
2.0
20.9
7.0
2.1
0.0
14.1
1.2
0.1
0.0
0.1
0.7
54,232
537,724
11,267
121,862
1,107,598
144,911
95,116
2004
T erm. 2006
2004
82,238
391,219
38,851
115,851
1,201,422
117,419
319,082
0
737,449
56,337
0
0
371
41,821
637,640
48,222
38,120
201,600
7,979
19,224
1.1
10.8
0.2
2.4
22.3
2.9
1.9
0.0
12.8
1.0
0.8
4.1
0.2
0.4
2005 T erm.
2005
2004
-
2002
2003 (e)
Lupo
Polo
Beetle
Beetle II
Golf
Bora
Jetta
Vento
Passat / Santana
Sharan
T ouareg
T ouran
Phaeton
Caddy
1998
2001
1998
2003
1999
1998
1996
2000
2002
2002
2001
1996
A0
A2
A3
A4
A6
A8
Cabriolet
T T /T T S
2002
2000
2003
2000
1997
2002
2002
1998
T erm. 2006
2006
2004
2005
0
49,369
144,756
309,151
182,309
11,708
184
39,349
0.0
1.0
2.8
6.1
3.6
0.2
0.0
0.8
0
37,578
125,538
339,562
178,773
10,942
20,705
34,711
0.0
0.7
2.5
6.8
3.6
0.2
0.4
0.7
0
31,535
126,594
319,398
198,108
15,980
26,876
33,000
0.0
0.6
2.5
6.4
4.0
0.3
0.5
0.7
Marbella
Arosa
Ibiza
T ango
Cordoba
Leon
T oledo
Alhambra
1982
1997
2002
2005
2003
1999
1998
2000
T erm 98
2005 T erm.
2004
2004
T erm. 2006
0
22,980
188,427
0
78,770
91,939
47,645
26,524
0.0
0.4
3.7
0.0
1.5
1.8
0.9
0.5
0
19,627
197,311
0
58,646
93,606
39,503
26,308
0.0
0.4
3.9
0.0
1.2
1.9
0.8
0.5
0
14,441
213,765
0
72,423
77,613
38,949
23,006
0.0
0.3
4.3
0.0
1.5
1.6
0.8
0.5
Felicia
Fabia
Octavia
Superb
Pickup
1995
1999
1996
2001
1996
T erm. 2001
2006
2004
T erm. 2001
25,928
284,437
175,613
581
3,981
0.5
5.6
3.4
0.0
0.1
0
254,966
163,198
24,305
0
0.0
5.1
3.2
0.5
0.0
0
269,625
174,070
30,000
0
0.0
5.4
3.5
0.6
0.0
1,781
280
320,173
0.0
0.0
6.3
1,210
442
333,666
0.0
0.0
6.6
3,144
919
281,759
0.1
0.0
5.7
5,107,945
100.0
5,023,264
100.0
4,976,700
100.0
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Bentley / RR
Lamborghini
Other
Total VW Group
(1) Production of predecessor and current models is combined e.g. Vento & Jetta.
Includes production by non-consolidated subsidiaries: AutoEuropa, Shanghai-Volkswagen,
FAW-Volkswagen and Chinchun Motor.
193
The company is aiming to lift sales in Nafta by more
than 50% by 2005 with a new product offensive.
Chairman Bernd Pischetsrieder said the group could
achieve unit sales of 750,000 a year in the US in the
medium term. Much of the growth is expected to
come from the new Touareg SUV, with projected
sales of 65,000 units in the US by the end of 2004. It
will also launch the all-new Microbus in the region in
2004.
European operations
Germany
Production of the new Touran officially began in
Wolfsburg in January 2003. VW expects to produce
180,000 units during 2003 year, rising to 200,000
units in 2004.
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Audi invested more than €500m at Ingolstadt to
prepare for production of the new A3 and plans an
initial daily production capacity of around 630 units.
Product plans
In 2002 Volkswagen’s board of management
approved a five-year capital spending plan that called
for spending of $30bn on new model development
and better production. 67% of the budget will be
devoted to its operations in Germany, as opposed to
the 60% earmarked for the company’s domestic
market in its previous plan. Most of the spending will
be used for expanding and renewing VW’s model
range.
Portugal
In February 2003 VW announced it would invest
€500m at the AutoEuropa plant at Palmela in
Portugal. The former joint venture with Ford, which
currently produces the Ford Galaxy, VW Sharan and
Seat Alhambra is to stop producing those models by
2005. There was concern about the plant's future
thereafter but it is now planned to produce a golfbased SUV there and possibly other Golf derivatives,
beginning in 2005.
However, the decline in performance during 2003 has
led to a revision. The company is now aiming to cut
€3bn from its plan by cutting spending, improving
investment efficiency and making its production
more flexible. As part of this plan the company is to
increase its use of modules to cover 50% of its
production from a current 10%.
Spain
Seat will make the new Altea sports people carrier
one of its three main models, along with the Ibiza
and the Leon. It will start manufacturing the Altea at
Martorell at the start of 2004. Some €160m has been
invested in the development of the vehicle, which will
use the same platform as the new Audi 3 and the fifth
generation of the VW Golf. Andreas Schleef,
chairman of The Altea is the first vehicle totally
designed and developed within the framework of the
new synergies between Seat and Audi.
It will also space out new model launches to avoid
having key products age at the same time. One of the
reasons its sales and profits are currently suffering is
that the Golf and Passat, respectively its first and
second best-selling models, are both nearing the end
of their lives simultaneously.
Slovakia
Much like our response to the lack of currency
hedging and merging of distribution for the different
brands, our response is one of astonishment that the
company is only just getting to grips with such
elementary issues.
W’s plant at Bratislava in Slovakia may be used to
produce the Audi Pikes Peak crossover SUV. The
plant currently produces the Polo, Golf, Bora,
Touareg and the body-in-white Cayenne. Production
at Bratislava (which is also a major gearbox plant) has
climbed steadily since its opening in 1994/95,
reaching 238,400 units in 2002.
The major product changes over the next few years
are shown in Figure 131.
PRODUCTION
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Hungary
In Hungary VW’s Gyor plant may cease car
production when production of its only remaining
model, the Audi TT, ends in 2005. The plant used to
produce the A3 as well but this ended in April this
year when the new generation A3, built at Ingolstadt,
was launched. Gyor will remain a key plant for engine
production, having produced 1.3m in 2002.
VW group’s production fell by 1.6% in 2002 to
5.02m units. This figure includes production by nonconsolidated subsidiaries in China.
Modular production
As mentioned, VW is currently moving on from its
platform-based manufacturing strategy toward an all
new system based on modules. Over the next four
years the company plans to replace its four platforms
with a core set of eleven modules, including engines,
transmissions, brakes, axles, fuel systems and door
locks. Savings of up to 5% of total production costs
are expected. VW also believes the modular system
will lead to greater brand differentiation.
194
Other regions
In September 2003 the foundation stone for the new
FAW-Volkswagen factory in Changchun was laid.
With a capacity of 330,000upa the new factory is
scheduled to be handed over in late 2004 or early
2005. FAW-Volkswagen is investing some €1bn in
the project.
Brazil
As indicated in the results discussion, the company
has recently restructured its Brazilian operations
cutting 3,933 jobs at its Anchieta and Taubate plants.
In its press release the company describes the move
as “a redimensioning programme” which is
presumably an alternative euphemism for ‘downsizing’. VW has said it will transfer to a newly-created
"training and study centre" the workers that do not
opt for the voluntary redundancy scheme. It will take
care of these workers until their contracts expire November 2006 for the Anchieta workers and
February 2004 in the case of the Taubate workers.
Also in September the Golf was officially launched in
China. It will be built in Changchun and the company
is aiming to sell 50,000 units in 2004.
The two joint ventures are planning to each launch
one new Chinese-built model a year onto the market.
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Russia
VW has made several unsuccessful attempts to
establish production facilities in Russia. In October
2003 it announced it was in discussions with the
Russian government about a new plant. Few details
were available at the time of writing but it sounds as
though the plan under discussion is for a fairly small
operation, assembling VW models from kits and
requiring investment of less than €100m. The
company does not want to commit to a bigger project
until it has gained some experience.
A new VW model for Europe will be built in Brazil
from 2005. The Anchieta plant beat competition
from VW’s plants in Spain, Portugal and Slovakia to
manufacture the Project 249 or ‘Tupi Europa’ model.
Up to 180,000upa will be made, all for export, while a
domestic version of the model will be made at the
VW/Audi Curitiba plant.
Mexico
VW aims to increase production by 30% in 2005,
when it begins producing the new Bora at its Puebla
plant. The new model requires investment of $180m
at the plant which will have the capacity for 100,000
Boras per year in addition to the existing 400,000upa
capacity for New Beetles and Jettas.
Ukraine
During 2003, Ukraine's ZAO Eurocar, began
assembling the Audi A4 and A6 alongside the Skoda
models it already produced. Ukrainian Audis are 45% cheaper than those made in Germany and
potentially can be exported to nearby Hungary,
Slovakia and Russia. The ZAO plant currently has
capacity to produce 8,000 Skoda models and extra
capacity to produce 45,000 Audi models a year is
being constructed.
India
VW wants to expand in India and is in exploratory
talks with various potential local partners for
assembly there. Local media report that VW has been
talking with Hindustan Motors on an alliance to
produce VW models. VW is also considering taking
over a Hindustan Motors plant near Madras.
In future ZAO Eurocar will also assemble VW brand
models including the Passat, Bora, Golf and Polo.
Commercial vehicles
VW is to go ahead with a modern remake of its
Microbus, first seen 50 years ago. The project will
cost €600m and create 1,500 jobs at VW's Hanover
plant in northern Germany when production starts in
2005. Some €400m will be spent on vehicle
development, with the remainder going on new plant
and equipment. VW is projecting annual demand of
80,000 units with two-thirds to be sold in North
America. If these expectations were met, Hanover's
output would be raised by 50% from the current
level. The plant currently produces the VW
Transporter and LT light commercial vehicles.
Skoda has brought forward the launch of CKD
assembly of the Octavia at Aurangabad, where it
currently assembles the model from SKD units. The
shift is due to changes in customs duties. Originally
Skoda had planned to change from SKD to CKD
operations in 2007. Because of the change there will
be a production slowdown at the plant resulting in
sales of around 4,500 vehicles this year instead of the
hoped for 8,500 units.
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China
The company has recently outlined its planned
actions in China over the next five years during which
time it expects to invest (or rather expects its joint
ventures to invest) some €6bn. It is to double its
annual capacity in the country from 800,000upa to
1.6m upa over the next five years. This means
expanding its two joint ventures: FAW-Volkswagen
in Changchun and Shanghai Volkswagen.
VW's truck operations are mainly based in Brazil at
Resende where it now produces trucks in the GVW
range 7t-40t. Production in 2002 was 18,580 trucks
and 5,020 buses, from 8,765 trucks and 3,780 buses
in 2000. The trucks are built at VW's Resende plant,
near Rio de Janeiro. Output in 2003 is planned at
27,000 vehicles.
195
The company plans to invest €400m over the next
four to five years at Resende. Capacity at the plant
will be doubled to around 200 trucks per day with
exports to Africa, Asia and the Near East accounting
for about 25% of output.
Statistics are presented in the appendix for the VW
Group, Audi AG, Seat SA and Skoda Automobilova
AS. The results of Seat are reflected in the group’s
consolidated accounts from 1986, those of Skoda
from 1992.
In October 2003 VW announced it is to establish a
truck assembly plant in Mexico. Capacity is planned
at 2,000upa to support the company's objective of a
market share of 15% in Mexico by 2006. The location
of the new assembly plant has not yet been
announced but it will be supplied with kits from
Resende. However, the engines will be supplied by
the Mexican subsidiary of Cummins.
The results of the consolidated finance companies are
included in the interest results, therefore do not affect
the operating income figures. The results of the
leasing companies are included within the revenue
and operating expense data. Capital investment
excludes additions to rental and leasing assets. Cash
flow in the data sheets reflects ‘inflow from current
operations’.
The van division is to invest €600m in Poland for a
fourfold increase of production from 40,000 vehicles
in 2002 to 150,000 in 2005. VW will manufacture new
T5 microbuses and delivery vans. At the Poznan
plant the company plans to reach a production
capacity of 200 transporters daily by the end of 2003
and by 2004 it hopes to have increased this to 600
vehicles a day. In total, VW will invest €178m in
2003. Employment will increase from 3,400 to 5,000
during that time.
In 2001 the company adopted International
Accounting Standards for the first time. The figures
for 2000 have been restated. The pre-tax profit for
2000 under the German accounting standards was
€3,469m. Under the IAS system this figure increased
to €3,719m.
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NOTES ON FINANCIAL STATISTICS
The VW Group financial year runs to 31 December.
The results of Seat are reflected in the group’s
consolidated accounts from 1986, those of Skoda
from 1992.
196

SAMPLE COPY The World’s Car Manufacturers 7th Edition An operating and financial review

Transcription

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