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  3. Strategy
  4. Outlook

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Outlook

The Volkswagen Group Board of Management anticipates a negative growth rate in the world economy in 2020 as a result of the spread of the SARS-CoV-2 virus. We also continue to believe that risks will arise from protectionist tendencies, turbulence in the financial markets and structural deficits in individual countries. In addition, growth prospects will be negatively impacted by continuing geopolitical tensions and conflicts. We expect both the advanced economies and the emerging markets to experience a marked decline in economic performance. Despite this, we expect the economic recovery to continue for the remainder of 2020.

In response to the Covid-19 pandemic, we have developed scenarios for the development of the passenger car markets in individual regions in 2020 which, for example, also take account of the trends currently being experienced in China. The scenarios reflect the differing temporal spread of the Covid-19 pandemic in the various geographic regions. In all, we expect the volume of global demand for new vehicles in 2020 to be between 15 and 20% lower than it was the previous year. In Western Europe, we anticipate a fall of around 25% in the volume of new passenger car registrations in 2020 compared to the prior year. After the drastic decline at the beginning of the second quarter, there was a recovery in the months that followed, and by the end of the reporting period, the prior-year figure was even equaled in individual months. We believe that the fourth quarter of 2020 will witness a sideways movement in the market, keeping volumes distinctly below the previous year’s level. Following the slump in the second quarter and the recovery in the third quarter, we also project a sideways trend in the passenger car markets of Central and Eastern Europe for the last three months of the year, leading to a considerable drop compared with the priory earfigure. We expect that the number of vehicles sold there in 2020 will probably be down around 20% year-on-year. The volume of demand in the markets for passenger cars and light commercial vehicles (up to 6.35 tonnes) in North America in 2020 is likely to be 20 to 25% lower than in the prior year. We anticipate that following the drastic decline at the beginning of the second quarter and a steady recovery in subsequent months, reaching the prior-year level in September, the market will weaken substantially in the last quarter of 2020. We expect to see new registrations of passenger cars and light commercial vehicles in the South American markets fall by up to 35% in 2020 compared with the previous year. Following the drastic decline in the second quarter and a strong upward trend in the third quarter, the fourth quarter will probably see the market move sideways at the level reached in the third quarter, whereby it will still not return to the prior-year figures. The passenger car markets in the Asia-Pacific region are likely to be between 10 and 15% below the prior-year level in 2020. After the very sharp decline in the first three months, the rapid rebound in the second quarter and a return to prior-year levels in the third quarter, we expect performance in the last quarter of 2020 to be down moderately on the previous year.

Trends in the markets for light commercial vehicles in the individual regions will also be mixed in 2020; on the whole, we anticipate a significant fall in demand due to Covid-19. In the markets relevant for the Commercial Vehicles Business Area, we expect a sharp to very sharp year-on-year fall in 2020 in new registrations for both mid-sized and heavy trucks with a gross weight of more than six tonnes and for buses.

In our view, automotive financial services will again be very important for vehicle sales worldwide in 2020. Our brand diversity, our presence in all major world markets, our broad and selectively expanded product range, and our technologies and services put us in a good competitive position worldwide. As part of the transformation of our core business, we are positioning our Group brands with an even stronger focus on their individual characteristics, and are optimizing the vehicle and drive portfolio. The focus is primarily on our vehicle fleet’s carbon footprint and on the most attractive and fastest-growing market segments. In addition, we are working to leverage the advantages of our multibrand Group even more effectively with the ongoing development of new technologies and the enhancement of our toolkits.

We anticipate that deliveries to Volkswagen Group customers will be significantly down on the previous year in 2020 due to the impact of the Covid-19 pandemic.

Challenges will also arise particularly from the increasing intensity of competition, volatile commodity and foreign exchange markets and more stringent emissions-related requirements.

We expect the sales revenue of the Volkswagen Group andits business areas – with the exception of the Financial Services Division – to fall significantly below the previous year’s level in 2020 as a result of the Covid-19 pandemic. We anticipate a severe year-on-year decline in the operating result before and including special items for the Volkswagen Group and its Passenger Cars Business Area as well as in the operating result for the Commercial Vehicles Business Area. In the Power Engineering Business Area and in the Financial Services Division, we expect the pandemic to have less of an impact on the operating result in 2020 due to their business models. For the Power Engineering Business Area, we anticipate a significantly higher operating loss than that of the previous year. For the Financial Services Division we forecast sales revenue on a level with the previous year and a significant drop in the operating result year-on-year. Overall, we expect the operating result for the Volkswagen Group for 2020 before and including special items to be in positive territory.

Wolfsburg, October 2020

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