Volkswagen AG returned to profit in the third quarter as surging Chinese demand for luxury cars helped offset a 1.1% drop in vehicle deliveries due to the COVID-19 crisis.
The German automaker reiterated it expects to post a profit for the full year, saying that its business “recovered noticeably” in the quarter as sales in China of its premium vehicles, including Audi and Porsche sportscars, rose 3%.
The company also benefited from a series of cost-cutting measures launched earlier this year to counter the impact of the pandemic.
“(The cost cuts) had as much of an impact as the continuing improvements in the situation in key sales markets, VW said.
The car marker said its net liquidity improved to 24.8 billion euros, up from 18.7 billion at the end of the second quarter.
Excluding one-time items, the company’s third-quarter operating profit was 3.2 billion euros ($3.78 billion), versus 4.8 billion euros a year earlier.
VW said the adjusted operating return on sales in its automotive division fell to 5.4% from 7.4% in the year-earlier quarter, but rebounded from minus 5.8% in the second quarter.
The automaker said while its full-year 2020 profit would still be “severely lower” than in 2019, it would still be in “positive territory.”
VW had posted a loss of 1.7 billion euros in the second quarter as it was hit hard by a drop in demand caused by the pandemic, which led to restrictions on movement, economic crises and swathes of job losses globally.
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