It's a good time to be in the luxury car business. In Volkswagen Group's financial report for the 2013 fiscal year, it is revealed that that Porsche enjoyed an operating margin of 18 percent. That means the Stuttgart brand made on average about $23,200 per car sold, according to BusinessWeek. Bentley wasn't far behind, and Audi (which was combined with Lamborghini) posted a 10.1 percent margin. This compares to only around 2.9 percent for the Volkswagen brand.

"Luxury brands are on fire," said Dave Sullivan, an industry analyst at AutoPacific. He said that the average profit margin is between six and eight percent. Brands like Porsche and Bentley have the benefit of competing in rarefied markets. Buyers looking at one their vehicles have fewer models to shop against and don't care as much about price. They can also charge more for options, which further boosts income, according to BusinessWeek.

In a way, we should be more impressed by the continued success from Audi. Its models generally have direct competitors in every segment from the other premium automakers. Plus, their buyers aren't the captains of industry who are shopping for a Bentley. Still, the Four Rings is leading rivals in sales so far this year.

Don't expect premium car sales to begin falling anytime soon. The world economy is slowly improving. "As developing nations develop and people start new businesses there is a growing demand for status," said Sullivan. VW Group isn't stagnating either. It announced plans in the report for 10 new models by the end of next year, including higher-end entries like the Audi A4, Q7, Porsche Macan and plug-in hybrid Cayenne. It clearly knows which vehicles are keeping the lights on.
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Volkswagen Group continues success story in fiscal year 2013

CEO Winterkorn: "There is a good chance that we will already exceed the ten million deliveries mark this year."
Healthy start to 2014 with a 4.7 percent increase in deliveries in the first two months
Even stronger focus on qualitative growth going forward

The Volkswagen Group met and even beat its targets for 2013 despite the challenging competitive environment. "2013 was an extremely challenging year for European automakers in particular. We weren't helped either by our home market or by exchange rates. Nevertheless, the Volkswagen Group put up a strong showing despite the difficult conditions", said Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, during the presentation of the company's 2013 financial results in Berlin on Thursday. Winterkorn announced that the Group will now focus even more strongly on qualitative growth, with a particular emphasis on earnings quality, quality in development and people quality.

According to Winterkorn, the Group already holds the key to sustainably strengthening its earnings quality in its hands in the shape of its modular toolkits. Rolling out the toolkit strategy across the Group in the coming years would be a unique achievement in the automotive industry. "As volumes grow and new models are added, we will also see increasingly positive earnings effects", he said.

Over EUR 10 billion spent on research and development

With respect to quality in development, Winterkorn announced plans to rev up the innovation engine even higher. The Volkswagen Group spent over EUR 10 billion on research and development last year – more than any other manufacturer in the world. Enhancing people quality means in particular increasing knowledge transfer. Winterkorn believes that the Volkswagen Group's greatest asset is the knowledge of its approximately 570,000 employees – and that this must be safeguarded and built on. At the same time, the Volkswagen Group will acquire new knowledge through its cooperation with around 280 universities and research institutes worldwide. "Sharing knowledge leads to new knowledge. This enables us to secure our technology leadership and business success in the future as well", said Winterkorn.

CFO Hans Dieter Pötsch was also satisfied with 2013. "The Volkswagen Group continued its success story and further strengthened its market position thanks to its high profitability", said Pötsch. "Given the ongoing challenges from the macroeconomic environment, we will continue to pursue our disciplined approach to cost and investment management and steadily improve existing processes. This provides a basis from which we can grow successfully in what remains a highly competitive environment."

Group figures for 2013

The Volkswagen Group's sales revenue increased by 2.2 percent to EUR 197.0 billion in fiscal year 2013 (previous year: EUR 192.7 billion). The Group's operating profit rose slightly to a record EUR 11.7 billion (EUR 11.5 billion). Deliveries grew by 4.9 percent last year to more than 9.7 million vehicles (9.3 million).

The Group's delivery figures include all vehicles manufactured and sold by its Chinese joint ventures, which exceeded three million units for the first time last year.

By contrast, the Group's sales revenue and operating profit do not include the Chinese joint ventures. Their businesses have always been accounted for in the financial result using the equity method and are therefore not included in consolidated operating profit.

The proportionate share of their operating profit rose to approximately EUR 4.3 billion (EUR 3.7 billion) in 2013. If this figure were included, the Group's profit per vehicle delivered would have been significantly higher.

The financial result declined to EUR 0.8 billion (EUR 14.0 billion) last year. It should be noted that the 2012 figure was positively impacted by measurement effects in connection with the integration of Porsche (EUR 12.3 billion). Overall, the Volkswagen Group's profit before tax was approximately EUR 12.4 billion last year (EUR 25.5 billion). Measurement effects in connection with the integration of Porsche also had a positive impact on profit before tax in 2012. The Group's profit after tax was EUR 9.1 billion (EUR 21.9 billion).

In light of the company's continued success, the Board of Management and the Supervisory Board will be proposing to the Annual General Meeting on May 13, 2014 to increase the dividend to EUR 4.00 (EUR 3.50) per ordinary share and EUR 4.06 (EUR 3.56) per preferred share.

The return on investment for the Automotive Division was 14.5 percent, well above the minimum required rate of return of 9 percent. The return on equity before tax in the Financial Services Division rose slightly to 14.3 percent (13.1 percent). "In order to safeguard the quality of our earnings for the long term, we will raise our profile in all key markets, leverage our unique brand portfolio, expand our attractive product range, drive forward technical innovations and offer our customers a wide variety of financial services offerings", said Pötsch.

Net liquidity in the Automotive Division remained sound at EUR 16.9 billion as of the end of December 2013 (year-end 2012: EUR 10.6 billion) thanks to the robust business model and net cash flow of EUR 4.4 billion. This gives the Group the necessary financial stability and flexibility to be able to maintain its profitable growth and to continue systematically implementing its Strategy 2018.

The ratio of investments in property, plant and equipment (capex) to sales revenue rose slightly by 0.4 percentage points to 6.3 percent. Volkswagen therefore remains at a competitive level within its target corridor of 6 to 7 percent. Alongside its production facilities, Volkswagen invested mainly in the expansion and ecological focus of its model range, the use of electric drives and the modular toolkits.

Brands and business fields

The Volkswagen Passenger Cars brand generated sales revenue of EUR 99.4 billion (EUR 103.9 billion) in 2013, falling short of the prior-year figure by 4.4 percent due to exchange rate and volume-related factors. Lower unit sales and upfront expenditures for new technologies in particular affected operating profit, which amounted to EUR 2.9 billion (EUR 3.6 billion). It should be noted that the figures for sales revenue, operating profit and unit sales do not include the Chinese joint ventures.

At EUR 49.9 billion (EUR 48.8 billion), Audi's sales revenue exceeded the prior-year figure by 2.3 percent despite negative currency effects. Its operating profit amounted to EUR 5.0 billion (EUR 5.4 billion). This decline is primarily attributable to upfront expenditures for new products and technologies, costs associated with the systematic expansion of the international production network and the challenging environment in many markets. The brand generated an operating return on sales of 10.1 percent (11.0 percent).

ŠKODA recorded sales revenue of EUR 10.3 billion (EUR 10.4 billion) in 2013. Negative volume, mix and exchange rate effects were the reasons behind the decline in operating profit to EUR 522 million (EUR 712 million).

SEAT recorded sales revenue of EUR 6.9 billion (EUR 6.5 billion) in 2013. Its operating result improved by EUR 4 million to EUR –152 million.

Bentley generated sales revenue of EUR 1.7 billion (EUR 1.5 billion) between January and December 2013. Bentley's operating profit rose by 66.9 percent to EUR 168 million due to higher volumes and positive exchange rate and mix effects.

Porsche recorded sales revenue of EUR 14.3 billion in 2013. Its operating profit amounted to EUR 2.6 billion, while the operating return on sales was 18.0 percent.

Sales revenue generated by Volkswagen Commercial Vehicles reached the prior-year level in 2013 at EUR 9.4 billion (EUR 9.5 billion). Its operating profit rose by 6.4 percent to EUR 448 million (EUR 421 million) as a result of successful cost optimization measures.

Scania recorded sales revenue of EUR 10.4 billion (EUR 9.3 billion). Its operating profit increased from EUR 930 million to EUR 974 million. MAN generated sales revenue of EUR 15.9 billion (EUR 16.0 billion) and recorded an operating profit of EUR 319 million (EUR 813 million), which was mainly impacted in the Power Engineering area by lower volumes, tougher competitive pressure, declining revenue from the license business and in particular by the recognition of project-specific contingency reserves.

Volkswagen Financial Services generated an operating profit of EUR 1.6 billion (EUR 1.4 billion) in 2013. The division signed 4.3 million new financing, leasing and service/insurance contracts worldwide (up 13.4 percent).

Winterkorn: "The Volkswagen Group has never been satisfied with just achieving the minimum."

The Volkswagen Group made a healthy start to 2014. In the first two months, some 1.5 million (1.4 million) passenger cars and light commercial vehicles (excluding MAN and Scania) were delivered worldwide, a year-on-year increase of 4.7 percent. "There is a good chance that we will already exceed the ten million deliveries mark this year – four years earlier than originally planned", said CEO Winterkorn, referring to the forthcoming product initiative.

This year and next year, the Volkswagen Group brands will be launching more than 100 new models, successors and product enhancements. This will include such key models as the new Passat, the Audi A4 and Audi Q7, the Porsche Macan and the plug-in hybrid version of the Porsche Cayenne, the new ŠKODA Fabia and ŠKODA Superb, and the SEAT Ibiza.

Despite the persistently challenging market environment, Winterkorn was guardedly confident about business development in the rest of 2014. "We are expecting a moderate increase in deliveries", he said. Challenges for the Volkswagen Group will come from the difficult market environment and fierce competition, as well as interest rate and exchange rate volatility and fluctuations in raw materials prices.

The modular toolkit system, which is being continuously expanded, will have an increasingly positive effect on the Group's cost structure. Depending on the economic conditions, the world's second-largest automaker expects 2014 sales revenue for the Volkswagen Group and its business areas to move within a range of three percent around the prior-year figure.

In terms of the Group's operating profit, Volkswagen is expecting an operating return on sales of between 5.5 percent and 6.5 percent in 2014 in light of the challenging economic environment, and the same range for the Passenger Cars Business Area. The Commercial Vehicles/Power Engineering Business Area is likely to moderately exceed the 2013 figure. Volkswagen expects the operating return on sales in the Financial Services Division to be between 8.0 percent and 9.0 percent. "The Volkswagen Group has never been satisfied with just achieving the minimum", said Winterkorn. Disciplined cost and investment management and the continuous optimization of its processes remain integral elements of the Volkswagen Group's Strategy 2018.

Further information on the Annual Media Conference and Investor Conference can be accessed at www.volkswagenag.com/ir.


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    • 1 Second Ago
  • 75 Comments
      c_lapap
      • 9 Months Ago
      Porsche has always built phenomenal, iconic cars for decades. Yeah, they're expensive but they are a benchmark in the industry. I don't know how anyone can say a bad thing about this company besides that they're expensive. Expensive=exclusivity, and exclusivity sells cars and breeds some of the best road going machines In the world.
        Avinash Machado
        • 9 Months Ago
        @c_lapap
        Not as exclusive as they once were.They are now selling in more volume thanks to models like the Macan.
      thedriveatfive
      • 9 Months Ago
      They retain there value amazingly so even if they do cost more it matters little as most of it comes back when it sells again. Price is only 1/2 of the equation, risidual value is more importent to most porsche buyers. Look at the price of used 911's as an example.
      DucatiCorse
      • 9 Months Ago
      Of course Audi makes a ton of margin. They can subsidize R&D and development equity of each car across many more models than their competitors can. They're basically dressed up VW's. Just like Lexus is a leather-ized Toyota. What car is a BMW dressed up as? What car is a Mercedes dressed up as?
        b.rn
        • 9 Months Ago
        @DucatiCorse
        "What car is a Mercedes dressed up as?" Chrysler
          b.rn
          • 9 Months Ago
          @b.rn
          Sometimes downvotes confuse me. There was a lot of platform sharing between Mercedes and Chrysler / Dodge.
        Lachmund
        • 9 Months Ago
        @DucatiCorse
        Audi only share a few platforms (the small ones) with VW. Lexus as well has very few shared platforms with Toyota. Stop talking out of your a**
          Tirac
          • 9 Months Ago
          @Lachmund
          @Ducati The Camry shares the IS platform? WUT? One is FWD the other is RWD, one is a mid size the other compact. WTF are you smoking?
          DucatiCorse
          • 9 Months Ago
          @Lachmund
          What? Here, let me do your homework for you. VAG (VW, Porsche, Audi) shares the following platforms as of current model year: PQ25 (A1, Polo) PQ34 (A3, Golf, Jetta) PQ35 (A3, Golf, Jetta, Scirocco, Tiguan) PL45 (A4, Passat, Passat GP) PL46/7 (A4, Passat CC) PL62 (A8, Phaeton) PL71 (Q7, Touareg) PL52 (Cayenne, Touareg) Beetle and TT share the same platform, but I forget it's designation. Lexus: The IS shares the Camry platform The ES shares the Avalon platform (changed from Camry as of 2013 model year) The RX shares the Camry platform The GX shares the 4Runner platform Note, these are PLATFORMS... not just "frames" or structural bits. They often include drivetrains, transmissions, shellwork, frame, suspension geometry, and assembly process... not to mention they select from the same pool of engine bases.
          DucatiCorse
          • 9 Months Ago
          @Lachmund
          @Tirac My mistake. The IS was on a Corolla platform until 2006. Then it was a shared, shortened GS platform.
          Brandon
          • 9 Months Ago
          @Lachmund
          The Corolla and IS are NOT on the same platform. Before 2006, the IS 300/200 were on the same platform as the Toyota Altezza which shares NOTHING with the Corolla. Please offer some proof as to why you think they were on the same platform. http://www.clublexus.com/forums/is-second-generation/674116-is-on-a-corolla-frame.html http://my.is/forums/f87/is300-corolla-216641/ http://trdforums.org/threads/lexus-is-riding-on-corolla-chassis.3918/ http://my.is/forums/gtsearch.php?cx=partner-pub-7865546952023728%3Algid7j-ib1a&cof=FORID%3A11&ie=UTF-8&q=is+the+lexus+is+a+corolla&siteurl=my.is%2F&ref=my.is%2Fforums%2Ff87%2Fis300-corolla-216641%2F&ss=8614j3578610j25
          Brandon
          • 9 Months Ago
          @Lachmund
          And again, don't even post @DucatiCorse if you have no idea what your talking about. http://en.wikipedia.org/wiki/List_of_Toyota_platforms
          DucatiCorse
          • 9 Months Ago
          @Lachmund
          @Brandon That's what I used as reference. Don't comment if you can't even bother deciphering the information you link. According to Wikipedia, Toyota-Lexus only have an A and X platform which is only half the story.
        Ted
        • 9 Months Ago
        @DucatiCorse
        The bmw is a dressed up Mini LOL !!! The Mercedes is still the first choice of Old ,Fat , Balding , Retired Lawyers through.
      Danial Sheikh
      • 9 Months Ago
      well it's easy to rebadge them and sell them at a profit with all the sharing components and platforms that is the case with all VW/Audi models currently on sale. This is how VAG cost cuts. They will never reach the level of quality or customer service by Toyota/Lexus though!
        Vato Homie
        • 9 Months Ago
        @Danial Sheikh
        When Toyota actually WINS the 24 Hours of Lemans...then you can say the two names in the same breath. Right now its Porsche 16...Toyota...zero.
        Lachmund
        • 9 Months Ago
        @Danial Sheikh
        Audi shares only a few platforms with VW. In fact only the A1 and A3. Better know your stuff before you spread BS on here.
          DucatiCorse
          • 9 Months Ago
          @Lachmund
          WRONG. How about YOU read before you spread BS on here. They all share the following platforms as of current model year: PQ25 (A1, Polo) PQ34 (A3, Golf, Jetta) PQ35 (A3, Golf, Jetta, Scirocco, Tiguan) PL45 (A4, Passat, Passat GP) PL46/7 (A4, Passat CC) PL62 (A8, Phaeton, Continenal, Flying Spur) PL71 (Q7, Cayenne, Touareg) PL52 (Cayenne, Touareg)
          Brandon
          • 9 Months Ago
          @Lachmund
          Most of the current Audi model range is on the MLB platform while newer VWs are going on to the MQB platformhttp://en.wikipedia.org/wiki/Volkswagen_Group_MQB_platform . So I guess you need to do a little more research before you try to act smart.
          DucatiCorse
          • 9 Months Ago
          @Lachmund
          @Brandon Seriously read your links. MLB and MQB are the general SHARED platform amongst mid sized (MLB) and small size (MQB) models in the entire VAG (Porsche,audi,vw) lineup. Seriously, do you not read your links?
          Brandon
          • 9 Months Ago
          @Lachmund
          I'll just leave this here... http://en.wikipedia.org/wiki/Volkswagen_Group_MLB_platform
          Brandon
          • 9 Months Ago
          @Lachmund
          Here are some clearer ones. MQB and MLB are not the same platforms. http://www.autocar.co.uk/car-news/industry/vw-s-four-platform-future-uncovered http://www.autoindustryinsider.com/?p=3622 http://blog.caranddriver.com/a-look-at-volkswagen%E2%80%99s-new-mqb-platform-for-front-wheel-drive-cars/ And did you read the first part? MLB: "The Volkswagen Group MLB platform is the company's platform strategy, announced in 2012, for shared modular construction of its LONGITUDINAL, front-engined, front-wheel drive automobiles." MQB: "The Volkswagen Group MQB platform is the company's strategy for shared modular construction of its TRANSVERSE, front-engined, front-wheel drive automobiles." One platform(MLB) used in Audi models is for Longitudinally FWD based cars like the A4 and A6 while the other(MQB) primarily for Volkswagen models like the new Golf is for transversally FWD based cars. they are not a shared platform because they're NOT the same platform. Please provide me any proof as to why you think otherwise, I'm all ears buddy.
      Danial Sheikh
      • 9 Months Ago
      oh and reliability too, they won't ever reach the level of Toyota/Lexus for that
        waetherman
        • 9 Months Ago
        @Danial Sheikh
        Porsche always ranks near the top for reliability.
          GOSCH
          • 9 Months Ago
          @waetherman
          GT3 on Fire!
          sparrk
          • 9 Months Ago
          @waetherman
          Toyota unintentional acceleration.
          CadiVetteFerrari
          • 9 Months Ago
          @waetherman
          @spark: c'mon, that's bs. It was revealed that it was driver error. Let's face it, you don't see Toyota's spontaneously catching fire. Don't be jealous because Toyota is more reliable than anything built in Germany. Just be humble and say, yeah, Germany, and everyone else, needs to learn from Toyota on making reliable cars.
        oneiron
        • 9 Months Ago
        @Danial Sheikh
        My 911 makes one trip a year to the dealer's service department. In 3+ years it has been repaired under warranty once--seat heater switch broke. It is my 6 Porsche in 41 years and every one is more robust and reliable than the one before it.
      tbird57w
      • 9 Months Ago
      shhhhhhhhh! buyers think they are really worth it. hats off to porsche for keeping that misconception alive and well. and a shout out to m-b which never wins major awards but they still charge top buck and get it! impressing folks is still a very strong selling point. anybody know what buffet and gates drive?
        yonomo200
        • 9 Months Ago
        @tbird57w
        You really have no concept of what value means in the marketplace, do you? If people are willing to pay a price which gives Porsche and VW a $23,000 profit on their cars, then they are most certainly "worth it."
      Trevor
      • 9 Months Ago
      I bet the profit margins on any of the "Turbo S" models is like $40-$50 grand.
        James
        • 9 Months Ago
        @Trevor
        I wouldn't be surprised if it was higher Profit margin than that. It is like 30 or 40 thousands dollars more for the "turbo S" over the "turbo" and like 0.1 seconds faster 0-60 time and 30 or 40 more HP. But hey all the it people pay it than all the power to them.
        Vato Homie
        • 9 Months Ago
        @Trevor
        MORE than that...could you afford a lighter from a Veyron?
      Vato Homie
      • 9 Months Ago
      Just as long as Porsche keeps kicking butt at Le Mans and Daytona AND producing the benchmark 911, then they have my money.
      Rob
      • 9 Months Ago
      That's because they're actually selling Volkswagens, like Tuaregs and Tiguan as Porsches. Don't forget that they also sell them as Audi Q5's and Q7's
      Richard
      • 9 Months Ago
      Impressing you neighbors with the badge on your car is now worth $20k or more. I'm sure this says something depressing about our image-obsessed society, but I don't feel like exploring that this morning.
        PeterScott
        • 9 Months Ago
        @Richard
        Please tell me where I can get the equivalent of a new Boxster for under $30K. I don't care about the badge, but I do car about the handling/feel/performance.
          PeterScott
          • 9 Months Ago
          @PeterScott
          A coupe doesn't equal the convertible. A Z-Convertible stats at $41K, and generally finishes at the back of the pack in comparisons, while the Boxster is the undisputed champion. It isn't about the badge. It is about being a better car all around that make the Boxster worth ~$10k more.
          Majerus
          • 9 Months Ago
          @PeterScott
          http://www.nissanusa.com/sportscars/z-coupe ...
      knightrider_6
      • 9 Months Ago
      Porsche is the Monster Cable of auto industry. There will always be people who would blindly pay $500 for an HDMI cable.
        cgm9999
        • 9 Months Ago
        @knightrider_6
        You just broke the internet with that comment.
      KAG
      • 9 Months Ago
      Porsche makes every little thing a option, of course they make a huge profit margin
        Barry Hubris
        • 9 Months Ago
        @KAG
        Flip that, you can just by the car or get it exactly as you want. I prefer this when ordering, as I hate packages. And yes, I've ordered 3 german cars that involved hand picking the options. Packages are for japanese cars.
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