Markets

Corona crisis pushes VW into the red – Renault with record loss

The corona virus pandemic does not leave the Volkswagen Group cold either. The world’s largest car maker saw a 23 percent drop in sales in the first half of the year. French rival Renault is also in the red with a record drop.

The most important thing about VW and Renault in advance:

  • VW cuts dividend after half-year loss
  • Nissan pulls Renault down with it

Even the world’s largest car group Volkswagen cannot avoid the negative effects of the coronavirus pandemic in the first half of the year. In addition to a sharp drop in sales, the DAX® company also reported red numbers. The dividend for the record year 2019 should therefore be reduced.

Products on Volkswagen Vz.

According to Volkswagen, revenue slipped by almost a quarter to around 96 billion euros in the first six months of 2020. Operating profit before special items fell to minus 0.8 billion euros, after a profit of around ten billion euros in the same period of the previous year. Nevertheless, the value was slightly better than expected by analysts (Reuters). Before tax, the loss was reported to be 1.4 billion euros after a pre-tax profit of 9.6 billion euros in the first half of 2019.

As the reason for the slump in earnings, the group management referred to the Covid 19 pandemic, which had caused the factories in the factories to stop in March and April in particular – and that sales in Asia, Europe and North America temporarily came to a standstill at times was. VW takes the still prevailing uncertainty as a result of the Corona crisis as an opportunity to lower the dividend for 2019: According to this, 4.86 euros instead of 6.56 euros should be paid out per preferred share.

The first half of 2020 is also not very pleasant for Renault: The corona virus pandemic and the associated negative effects on the entire automotive industry have hit the French automaker particularly hard in recent months. The partnership with Nissan also had a negative impact. At the end of the first half of the year, there was therefore reported a loss of billions.

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According to Renault, this amounted to 7.3 billion euros. In the same period last year, the car company and VW competitor had posted a profit of around 970 million euros. Turnover also dropped: it dropped by a good third to 18.4 billion euros after car dealerships had to be closed for weeks because of the lockdown measures to curb the Covid 19 pandemic and production had come to a standstill in the meantime.

The minus of the French carmaker is, however, an all-time high in the company’s history. This is also because the Japanese partner Nissan is weakening. Without these effects, the loss would have been just over two billion euros.

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Source: HSBC

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