Volkswagen boss gets €7.78m remuneration for 2016

Firm reports €7.1bn profit last year with sales up 12.2% in China despite ‘dieselgate’

VW Golf cars   in Wolfsburg, Germany: VW Group made a   €7.1 billion profit last year, from 10.3 million vehicle sales – that includes €6.4 billion set aside to cover the costs of the emission scandal. Photograph: Fabian Bimmer/Reuters

VW Golf cars in Wolfsburg, Germany: VW Group made a €7.1 billion profit last year, from 10.3 million vehicle sales – that includes €6.4 billion set aside to cover the costs of the emission scandal. Photograph: Fabian Bimmer/Reuters

 

Volkswagen Group’s chief executive Matthias Mueller was awarded €7.78 million in pay and benefits for 2016, up from €4.17 million in total remuneration awarded a year earlier, the company’s annual report showed on Tuesday.

Mr Mueller was not awarded a full year’s chief executive pay for 2015 since he only took over in September following the resignation of his predecessor Martin Winterkorn, who was forced out in the wake of a diesel emissions cheating scandal.

The group has confirmed that it has managed to largely overcome its “dieselgate” predicament, with Mr Mueller saying that the carmaker is “in robust good shape, and optimistic for the challenges ahead, not just for us but for the industry as a whole.”

The company appears to be swinging towards a greater focus on the Chinese market, where its sales rose by 12.2 per cent, and where Mueller has promised to launch many more models, from large SUVs to entry-level cars.

Speaking with regard to the US market, Mr Mueller described it as a difficult area, adding that there was an underlying sense that the group is looking to move away from a heavy focus on the American market, driven both by the diesel issues, and by the possibility of tariffs being imposed on imports from its Mexico factory.

VW Group made a huge €7.1 billion profit last year, from 10.3 million vehicle sales, and that includes €6.4 billion set aside to cover the costs of the emission scandal and the repair and replacement of customers’ cars. That brings the total costs of dieselgate so far to around €22 billion. Mr Mueller claimed that 200,000 cars a day were being processed through dealers, and having both software and hardware upgraded. The hope within VW is that the full process should be completed by the autumn of this year.

Mr Mueller has also said that VW must seek a global leadership in environmental friendliness “for acceptance in society and for our sustained economic success. This is crucial not just in light of the recent events, but above all for the future of our company.”

Mr Mueller announced that Audi would take the lead within the VW Group for the development of self-driving, autonomous vehicles. VW though is looking to take a lead, not just within the group but among all carmakers, in battery technology. To help power the promised 30 battery-powered cars which the group has promised to have on sale by 2025, VW is working on so-called solid state batteries, which have much higher energy density and faster charging times than current systems.

Revenue by brand

Across the VW Group, sales and profits have either increased, or fallen by only a little as it seems that car buyers are willing to overlook the company’s emissions cheating. VW brand revenue was the worst hit, falling by 0.6 per cent overall. Audi (whose figures also include those for Lamborghini and motorbike maker Ducati) saw its sales revenue rise by just short of €1 billion, although operating profit fell by 0.6 per cent, with most of that being ascribed to dieselgate costs.

Skoda’s profits rose by a whopping 30 per cent, while significantly Seat has at last moved into profit, after its sales revenue grew by 3.8 per cent. Bentley returned a modest €112 million profit, but Porsche remains an earnings powerhouse for the VW Group, with profits of €3.9 billion.

In spite of these solid results, Mr Mueller used his speech to investors and journalists to call for ever increasing change within the group. “We need to transform not because everything in the past was bad but because we will see more change in the coming ten years than in the past 100 years. Above all, a new era calls for new ways of thinking” he said.

“We need to be more agile, more courageous, more entrepreneurial. We also need to become more female, especially at management level. Twenty-sixteen did not turn out to be the nightmare year that many predicted for Volkswagen. We achieved much. Even though much work lies ahead of us, Volkswagen is back on track.”

VW overhauled its bonus and executive pay policy in February this year to cap total pay for its chief executive at €10 million and other top managers at €5.5 million.

VW brand chief Herbert Diess saw his total remuneration for 2016 fall to €3.93 million, down from €7.13 million in 2015, the annual report showed.

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