VW sticks to operating profit goal despite ‘very bad’ second quarter

Volkswagen Group is standing by its goal of posting an operating profit this year even as the collapse in car demand from the coronavirus pandemic hits its second-quarter performance.

The second quarter is going to be “very bad,” and the German automaker will have to be highly disciplined on spending to meet its target for the year, according to comments from CEO Herbert Diess and CFO Frank Witter at an internal meeting with managers.

Volkswagen confirmed the comments by the two executives by phone on Monday, after German magazine WirtschaftsWoche first reported them.

VW Group its peers have been hit hard by the crisis, which forced factory stoppages and crippled sales in key markets such as Europe, China and the U.S. The automaker's global groupwide vehicle sales fell 34 percent to 609,400 last month.

The German automaker had pulled its forecast in late April, telling investors that the three months through June would be tough but that cost-cutting efforts will allow VW Group to remain profitable for the full year.

The Wolfsburg-based company has had a turbulent few weeks, with an internal management dustup, furor over a marketing video criticized as racist, and software issues affecting the rollout of the flagship ID3 electric car.

Even as factories are ramping up again, consumer behavior remains uncertain amid shaky confidence and concerns that restrictions could be tightened again in the event of a second wave of infections.