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Volkswagen takes $3-billion hit due to the coronavirus pandemic

Volkswagen takes $3-billion hit due to the coronavirus pandemic

The coronavirus disease (COVID-19) being a threat across the globe. Companies take a hit on their profit and Volkswagen is one of them. Of course, the pandemic slammed their sales and earnings in the first quarter. However, the world’s largest carmaker still remains positive that they will make income and break-even after the closures ended.

Volkswagen takes $3-billion hit

As vehicle sales fail, Volkswagen’s first-quarter operating profit went from $3.3-billion to $978-million from a year ago. Although they already warned that their profit could be considerably low this year, they remain positive. Volkswagen, which also owns Audi, Porsche, and Seat brands, stated that their sales fell 25% to 1.9-million while deliveries to customers went down 23% at 2-million.

Volkswagen expects sales to be lower this year

The company also expected that its sales and profit to be severely below the prior year. Aside from that, they also knew that the global demand for new vehicles this year will be between 15% to 20% lower than in 2019. Although, the Asia Pacific should perform better than other regions where they will only suffer a decline between 10% and 15%.

Chief financial officer Frank Witter said in a statement:

“The global Covid-19 pandemic substantially impacted our business in the first quarter. We’ve taken numerous countermeasures to cut costs and ensure liquidity and we continue to be robustly positioned financially… The Volkswagen Group is steering through this unprecedented crisis with focus and determination.”

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

Major carmakers begin restarting production in Europe

Volkswagen has already opened its biggest plant in Wolfsburg, Germany on Monday, April 27. After the longest shutdown in its 82-year history, almost all of its factories have already gone back to work. Making a hundred changes in the way they operate, they made sure to restart business without risking the health of their workers.

Founder of the Center Automotive Research at the University of Duisburg-Essen Ferdinand Dudenhöffer talked to CNN Business. Tough times will remain in the future. Although demand in China could bounce back, car sales in Europe will take at least a decade to return to the level they had in 2019.

All photos came from Volkswagen Newsroom.

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