Volkswagen Group sales suffering in wake of supply constraints

Sales of Volkswagen Group models in Australia are “suffering more than most” as its brands continue to be strangled by supply issues, its boss has said.

Speaking exclusively to Wheels, Managing Director of Volkswagen Group Australia Paul Sansom said the Group’s brands – which include Audi, Volkswagen, Skoda and the recently launched Cupra – had a tough start to 2022 locally, but are expecting a better result for the second half of the year.

Globally however, the Volkswagen Group has recently reported good financial performance – posting a €13.2 billion operating result for the first half of this year, 16.1 per cent up on 2021, and €4.7bn profit for the second quarter of 2022. Its 2021 profit was €19.3bn.

Year-to-date, Volkswagen Australia has sold 15,077 vehicles, with Skoda adding another 3758 into the mix and Audi 7748. Cupra’s three-model lineup, which went on sale last month, adds another 49 cars for the year so far.

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In 2021 for the whole 12 months Volkswagen locally sold 40,770 cars, Skoda 9185 and Audi 16,003. With only five months left of 2022 to go (August results are not posted until the beginning of September) it’s unlikely the Group will be able to meet or exceed last year’s numbers.

“There's obviously still some huge headwinds out there in the supply chain that are affecting us – probably more significantly than some others here in Australia,” said Sansom. “Despite that, we are selling pretty much everything we can lay our hands on and our order banks are really strong across all of our brands – including Cupra.

The MD said its supply chain issues stem from the three big problems affecting the entire industry – and those beyond – over the last year or two, including the COVID-19 pandemic, shortage of semiconductors and war in Ukraine.

“The pandemic and shortage in semiconductors were quickly compounded by the horrific invasion of Ukraine by Russia – where there are a lot of component parts,” he added. “Then there was a second shutdown in Shanghai where we've got 19 component factories – they weren't operating for the best part of two months. All of those three major seismic events have happened in the space of six to 12 months have had a profound effect on the supply chain.

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“The sales numbers for the Group are reflective of simply the cars that we’ve been able to produce and import. We're much further down than we'd like to be. We've got a lot of cars sitting in an order bank, which is great – it gives us confidence. We will have a much stronger second half of this year to the first half.

"We've lost a bit of market share, but we're very confident that we'll bring it back. Our products are the strongest they've ever been. Whether it's traditional combustion engine products or some of the new battery-electric vehicles that will be bringing to market, they really are the benchmark. So we're very confident that we'll recover.

“It's really a question of just getting the cars here to Australia, but of course we are cautious the world’s changing rapidly and things have even in these last few months – such as some economic factors that we’re very mindful of as we're planning our volumes for the foreseeable future.

"Interest rates are rising, inflation’s going up significantly, household costs are too, and disposable income is coming down. So there's reason to be optimistic in the sense that we've got a big order bank that's strong, but the showrooms are starting to slow down a little bit over these last couple of months.”

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So far this year, Volkswagen’s most popular model has been its T-Cross light SUV, followed by the Tiguan mid-sized SUV and Amarok ute. Meanwhile, Skoda’s Kamiq small SUV continues to be its best-seller, followed by the Octavia sedan and wagon, and Audi leads with its Q3 small SUV, Q5 medium SUV and A3 hatch/sedan.

But, says Sansom, there is still a place for the Group’s pioneering models – such as the iconic Golf, the future of which was recently thrown into doubt due to European emissions regulations.

“[Golf] is still an important pillar. I think the point to make about the Golf is that it’s synonymous with the brand. Now there are other, more popular, cars sure, such as the T-Roc and the T-Cross we're relaunching at the end of this month – they’re all brand pillars, there’s not just a single one.

“It's great to have that staple model, like a Golf, because it’s your bread and butter. But it’s good to have that diversity as well, that’s the best formula. We've built our reputation on the back of Polo and Golf in particular, and that gives you the platform to expand. It’s so reliable, you know that you're gonna make sales with that car, and as a result the others you can afford to be a little bit more adventurous with as well.”