VW's sales have held up reasonably well in November despite ongoing difficulties in Russia and South America as company aioms to create clearer positioning between volume brands.
IHS Automotive perspective | |
Significance | The VW Group's sales slipped by a further 2.2% y/y in November to 833,700 units. Meanwhile VW has appointed former Opel boss Thomas Sedran to plot a road map for the Group's brands over the next 10 years. |
Implications | The main factors behind November's performance were accelerated sales declines in South America and Russia and another fall in VW brand sales, which fell 2.4% during the month. |
Outlook | Although the overall sales trend is down, sales do not yet appear to be markedly affected by the emissions situation in the short term and indeed, the decline the VW passenger car brand experienced during the month was significantly lower than the trend for the first 11 months of the year, of a 4.5% decline. Meanwhile Sedran has an important task in working out clearer positioning for VW's volume brands. |
The Volkswagen (VW) Group has reported that its overall global sales fell by 2.2% year on year (y/y) in November to 833,700 units, according to a company press release. This result was not far in advance of the rate of decline in the first 11 months of the year, which saw an 1.7% y/y fall in sales to 9,095,900 units. On a regional basis the Group posted another reasonably robust result in Europe, up 1.0% y/y in November to 325,200 units. This was marginally down on the overall rise in January–November of 2.8% y/y to 3,734,200 units across the region. The vast majority of these sales were made in Western Europe where volumes were up 2.6% y/y to 270,400 units in November, down compared to the 5.1% y/y increase during the rest of the year to 3,172,800 units. Interestingly the company outperformed the sales trend for 2016 during November, with a 4.4% y/y increase during the month in its domestic market, as opposed to a 4.2% y/y rise in the first 11 months of the year. This would appear significant in the context of the emissions situation that has affected the company since the end of September. Sales in central and Eastern Europe were down by 6.2% y/y in November to 54,800 units, while they were down 8.6% y/y in the first 11 months of the year to 561,500 units. One of the biggest falls was recorded in Russia where the dire macro picture continues to ravage the passenger car market, with a 34.6% y/y fall in November to 15,600 units, with a 36.7% y/y fall for the year to date (YTD), with sales falling to 157,600 units. Sales in South America also took a significant hit with a 42.2% y/y fall to 40,200 units, mainly due to the very poor state of the Brazilian market due to macroeconomic factors, while YTD sales fell by 27.9% y/y to 524,000 units. Sales in China were relatively robust with numbers actually rising strongly in November by 5.5% y/y to 329,000 units, beating the decline in VW's biggest market in the first 11 months to 3,219,400 units.
Brand by brand
The VW passenger car brand, which makes up around 60% of the Group's overall sales, posted an relatively strong result in November, down 2.4% y/y to 496,100 units. This compares favourably to the 4.5% y/y decline to 5,335,700 units in the YTD. This positive result may be an early clue of how limited the scope of the emissions situation will be in terms of affecting the company's main brand sales, especially as the firm gradually appears to be getting a grip on the situation.
Audi's performance was solid and unspectacular but again it at least recorded an increase, which was positive result given the scrutiny the brand has been under in recent weeks, with sales rising by 1.0% y/y in November to 147,700 units, although this was a slowdown on the YTD sales rise of 3.4% y/y to 1,644,900 units.
Skoda suffered a reverse on its sales trend in November with a 1.0% y/y fall in sales to 89,000 units in November, which could be viewed as a negative result given recent new model launches in the form of the new Fabia and Superb. However, YTD sales remained up by 1.4% y/y to 968,900 units.
SEAT did not enjoy a strong month with a 3,0% y/y decline to 32,400 units as the positive influence of the launch of the latest Leon begins to fade and weaknesses in other areas of the brand's model portfolio become exposed. However, sales were up 3.5% y/y in the YTD.
Porsche experienced one of the most dramatic sales growth slowdowns in the brand portfolio in November, with sales growth slowing to a 2.1% y/y increase to 18,100 units after months of accelerated double-digit rises due to the launch of the Macan. With the Macan well established in the global market by November last year Porsche's sales now have a higher base comparison. YTD sales growth was still strong with volumes up 24% y/y to 209,900 units meaning the brand has already set a new sales record.
VW Commercial Vehicles sales fell 10.2% y/y during the month to 33,700 units, with YTD sales falling by 2.8% y/y to 390,300 units.
Outlook and implications
The VW Group's sales for November could probably be viewed as being reasonably robust, especially given the negative publicity the company has faced in recent months from the emissions situation. Indeed the main VW passenger car brand actually outperformed its wider sales trend for the first 11 months of the year with a decline of 2.4% y/y in comparison to the 4.5% y/y fall in sales during the YTD. Using sales data in the immediate aftermath of the situation is obviously not the most accurate barometer of how the situation will affect sales in the medium and longer terms, especially as a significant percentage of November's sales tally will include advanced orders made before the emissions situation arose. However, that said it is perhaps a positive early indication that the impact on consumer sentiment towards the main VW brand and others in the portfolio may not be as marked as first feared. VW has employed former Opel and Chevrolet Europe brand head Thomas Sedran to come up with a clear strategy for the company's brand portfolio over the next decade, specifically how the volume brands – the VW passenger car brand, Skoda and SEAT – will be positioned and interact with each other in the market. The company has announced a variety of cost-cutting measures in response to the emissions affair and it remains to be seen if they will be enough cover liabilities and ensure VW retains access to low-cost borrowing on the credit markets. VW appears to be getting a grip on the crisis and has a clear plan of how to proceed (see Germany: 11 December 2015: VW admits small number of employees broke rules in emissions situation, external investigation ongoing), while other positives emerged last week such as the CO2 element of the situation being far less marked than first anticipated. Less than 5% of the cars originally suspected of being implicated are actually involved (see Germany: 10 December 2015: VW says far fewer cars have false CO2 ratings than originally thought, appoints Garcia Sanz to oversee diesel issue). Nevertheless it will be interesting to see how radical Sedran's brand strategy will be, especially with regards to SEAT, which has long been the lame duck in VW's otherwise outstanding portfolio of brands.