A worker wears a protective mask at a Volkswagen factory in Wolfsburg, Germany, after the company restarted production there in late April.
Photo: pool new/ReutersBERLIN— Volkswagen AG VOW -5.03% slashed its proposed dividend Thursday after swinging to a net loss in the second quarter, but the world’s biggest car maker by sales also said there were signs a recovery was under way in markets from Western Europe to the U.S.
Volkswagen, which also makes the Audi and Porsche brands, posted a net loss of €1.61 billion ($1.9 billion) in the second quarter ended June 30, compared with a net profit of €3.96 billion the same period a year earlier. Revenue fell 37% to €41.08 billion from €65.19 billion as sales slipped across the world because of economic shutdowns aimed at containing the pandemic.
“The first half of 2020 was one of the most challenging in the history of our company due to the Covid-19 pandemic,” said Chief Finance Officer Frank Witter.
The coronavirus has plunged car makers around the world into one of the deepest crises in recent years and added to struggles the industry was already facing before the pandemic with softening demand for cars and soaring costs for technology.
Renault SA RNO -7.34% on Thursday posted a net loss of €7.29 billion for the first half of the year as the French auto giant reeled from the effects of the pandemic as well as the woes of its alliance partner Nissan Motor Co.
The plunge was more than twice the loss Renault posted for all of 2009 amid the financial crisis. It also outstripped analysts’ forecast of a €4.49 billion loss. Shares fell more than 5% in early trading in Paris.
Nissan contributed €4.82 billion to Renault’s loss for the period as the Japanese firm wrote down assets affected by a restructuring plan last year. Renault owns 43.4% of the Japanese car maker as part of a globe-spanning auto alliance that also includes Mitsubishi Motors Corp.
Volkswagen said that because of the heft of the impact from the pandemic and difficulty in predicting the future, the company will propose to shareholders to lower its dividend for 2019 to €4.8 per ordinary share from a previous proposal of €6.5 per ordinary share, and €4.86 per preferred share instead of €6.56.
Shares were trading down 4.5% Thursday morning.
The German auto maker sounded a more optimistic note for the second half of the year.
Through May, mainly sales in post-lockdown China had been showing signs of recovery, while in the U.S. and Europe they continued to decline sharply. But Volkswagen said a recovery in demand for cars in markets from Western Europe to the U.S. helped the group improve car deliveries to customers in June and July, even though they remained in the red.
In June, car deliveries to customers in Western Europe were still down 30% but that was better than the 57% drop in May, Volkswagen said. For the month of July, the car maker now expects a single-digit percentage drop in deliveries for Western Europe and a continued improvement throughout the second half of the year.
The recovery is less pronounced in the U.S., also because demand there didn’t collapse as strongly as in Europe during the shutdowns, Volkswagen sales chief Christian Dahlheim said. In June, deliveries to customers in the U.S. were still down around 20%, he said, compared with a drop of over 40% in April.
“Due to the positive trend exhibited in our business over the past few weeks and the introduction of numerous attractive models, we look cautiously optimistic to the second half of the year,” Mr. Witter said.
Daimler AG last week said it was seeing signs of recovering demand for luxury cars and electric vehicles, with China leading the way, prompting shares to rise. The pandemic, however, also prompted Daimler to expand cost cutting.
Overall for the year, Volkswagen said it expects full-year sales to be significantly below last year’s level and operating profit to be severely below last year’s figure but still positive.
—Nick Kostov in Paris contributed to this article
Write to Ruth Bender at Ruth.Bender@wsj.com
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