On Thursday, Volkswagen, Europe’s largest automaker, increased its operating margin goal for 2021, citing increased demand for more profitable vehicles in the first three months of the year.
With vehicle deliveries and revenues both up by more than a quarter, the company now expects its operating profit margin to be 5.5-7 percent this year, compared to a previous estimate of 5.0-6.5 percent.
The better outlook is mainly driven by improved demand for high-margin premium cars such as Porsche and Audi, a trend that has also been observed by rivals General Motors, Daimler and Ford and Stellantis.
During the first quarter deliveries of cars under the Porsche and Audi brands were both up about a third year on year, Volkswagen has said. Sales of electric vehicles more than doubled to 133,300 vehicles.
“We started the year with great momentum and are on a strong operational course. This is clearly reflected in our positive quarterly figures,” Volkswagen AG CEO Herbert Diess said.
“Our successful e-offensive continues to gain momentum and we have significantly expanded it with attractive new models.”
Shares in the group were indicated to open 1.2% higher in pre-market trade.
The world’s second largest carmaker by vehicle sales this year pleased investors when it provided more detail about its electric vehicle strategy, including higher sales targets and plans to build six battery factories in Europe.
Volkswagen’s operating profit increased to 4.8 billion euros ($5.8 billion) in the first quarter of this year, thanks to cost cuts and higher revenues, compared to 0.9 billion in the same period last year, when the COVID-19 pandemic had a negative effect.
Even though the effect of an ongoing shortage of critical automotive chips is expected to worsen in the second quarter, the company’s outlook for the year has improved.