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Volkswagen CEO Herbert Diess confirms 2020 outlook; expects September delivery growth to continue

Volkswagen Group CEO Herbert Diess said the automaker’s September orders have been higher than last year and that he expects the positive trend to continue in the fourth quarter.

In a sign that VW is recovering from the coronavirus pandemic that sent vehicle sales plummeting, Diess also reaffirmed the company’s target of positive operating profit for the year.

“The restructuring of the company has not been slowed down by corona, but accelerated,” Diess said in prepared remarks at the company’s annual shareholder meeting Wednesday.

Diess also said Volkswagen needs to change to stay relevant in the electric and digital vehicle era and will announce “important steps” to that end before the close of the year.

“Volkswagen needs to change: From a collection of valuable brands and fascinating combustion-engine products that thrill customers with superb engineering – to a digital company that reliably operates millions of mobility devices worldwide,” Diess told shareholders.

Vehicles need to stay in contact with customers, offer new services and comfort functions on a weekly or even daily basis, he said.

“We will take further important steps to set the course for this in the rest of 2020,” Diess said.

The pandemic has left the global car sector mired in the worst crisis in decades, just as it faces pressure to invest in new technology as the combustion era draws to a close.

For the first eight months, VW Group’s deliveries are still down 22 percent to 5.6 million vehicles with the sharpest drop of 31 percent in its home market of western Europe.

At the shareholder’s meeting, Diess was trying to convince investors that the electric offensive he has started will help the company compete with Tesla.

The shareholders, by contrast, focused their questions on other matters entirely, notably the criminal trial taking place on the same day.

“What will you do to make sure the stock market can honor the ambitious strategy of the VW Group in the area of electric vehicles and is not frequently scarred by reports about scandals?” Ingo Speich, a fund manager at Deka Investment, asked management in a statement issued before Wednesday’s meeting.

Prosecutors on Wednesday began presenting their cases against former Audi chief Rupert Stadler and other executives for alleged roles in the diesel scandal.

For all VW’s efforts to put its polluting past in the rear-view mirror, probes into its Audi and Porsche divisions’ engines are ongoing. A marketing campaign criticized as racist also recently caused an uproar; an eavesdropping affair generated unflattering headlines; and outsiders within the insular company’s upper ranks have resigned, been demoted or reassigned.

Diess is among those caught up in the tumult. Run-ins with powerful labor leaders and the automaker’s board cost him the role of directly controlling the company’s main passenger-car operations.

“This year’s infighting between CEO Herbert Diess, parts of the supervisory board and the workers council is a warning signal concerning the operational performance and the willingness and speed of change at VW,” Arndt Ellinghorst, a Bernstein analyst wrote in a Sept. 18 report.

Diess, 61, came under fire over software problems that delayed the rollout of the ID3 electric car and the Golf hatchback earlier this year.

The ID3 and the upcoming ID4 crossover are the first mass-market EVs that VW is launching in the wake of the diesel saga that has cost the company about 32 billion euros ($37 billion) and is far from over.

Volkswagen, which also owns Audi, Porsche, Seat and Skoda, is looking at whether it has the resources to accelerate development of electric platforms for smaller brands at a time it is investing billions to transform its more mainstream cars.

Asked whether Ducati, which is known for making combustion-engined motorbikes, has an electric future, Markus Duesmann, who oversees research and development for the group, said: “It will not take long until we see an electric Ducati.”

Whether Ducati, which is a medium-sized premium motorbike brand, would offer an electric variant, depends on whether a bike could offer range comparable to a combustion-engined variant, Duesmann said.

Advances are being made in battery technology which could make this possible, he added.

Separately CFO Frank Witter, in response to a question about whether a sale of Lamborghini is planned, said Volkswagen does not comment on speculation about potential divestments.

Lamborghini CEO Stefano Domenicali this week announced his departure from the sports car maker to take on a new job as president of Formula One.

Bloomberg and Reuters contributed to this report.

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