Bentley gets ultimatum to be profitable

Bentley gets ultimatum to be profitable

Volkswagen Group’s main shareholders, the Piech and Porsche families, have given Bentley, the automaker’s UK ultraluxury brand, an ultimatum to become profitable within two years.

“The important thing is for every [VW Group] brand to generate a reasonable contribution margin,” Wolfgang Porsche, head of the families, told the Frankfurter Allgemeine Zeitung. “That is not currently the case at Bentley, and we are not satisfied.”

“It can only be one to two years,” said Hans Michel Piech, another family spokesman, asserting that Bentley must complete its turnaround within that period.

The two VW Group supervisory board members did not say what would happen if Bentley fails to return to profitability.

Their remarks were a surprise as the families tolerated losses at VW Group’s Seat brand for many years.

Bentley lost 137 million euros in the first nine months of 2018 compared with a small profit in the same period in 2017, according to the latest financial report from parent Volkswagen Group.

A slow ramp up of the new-generation Continental GT and exchange rate problems after the British pound fell following the UK’s vote to leave the EU were among reasons for the loss. Bentley sources many components from continental Europe, making them more expensive when the pound is weak.

The rollout of the new Continental was delayed to get the right calibration for its Porsche gearbox and to finesse the details, CEO Adrian Hallmark told Automotive News Europe in an interview in November.

Bentley also was too slow to ready its cars for Europe’s new WLTP testing regime, Hallmark said.

Hallmark said Bentley could post a full-year profit in 2019 because the brand would see significant growth and a return to normality after a “conversion year” in 2018.

Source link