Dive Brief:
- Volkswagen Group delivered 2.1 million vehicles globally in the first quarter of the year, a 3.1% increase from the same period last year, the company announced in a press release.
- Volkswagen’s vehicle deliveries jumped by 5% in North America, 14% in South America and 8% in China in Q1, while deliveries in Europe were relatively flat.
- Despite an increase in vehicle deliveries in Q1, the automaker’s profits fell by 20% year over year from 5.7 billion euros ($6.1 billion) to 4.5 billion euros ($4.9 billion) as a result of lower-than-anticipated vehicle sales and growing expenses as it invests in launching new electrified models for the global market.
Dive Insight:
Quarterly vehicle deliveries were impacted by short-term supply shortages that stalled production of Audi vehicles equipped with V6 and V8 engines, Volkswagen Group CFO and COO Arno Antlitz said during the company’s earnings call.
“As expected, our first quarter results show a slow start to the year,” said Antlitz, in a press release. “We remain confident of achieving our financial targets for 2024. A strong March, the solid order bank and the improving order intake in the past months are encouraging and should already have a positive impact in the second quarter.”
Despite a 20% drop in profits in Q1, Volkswagen’s outlook for the full year remains unchanged. Total revenue in Q1 was 75.5 billion euros, a 1% decrease from last year. However, the automaker anticipates its full-year revenue will increase as much as 5% while achieving a profit margin in the range of 7% and 7.5%.
Volkswagen also expects strong growth in electric vehicle sales in China will help boost its profits in the upcoming years, which is the world’s largest auto market. The automaker is targeting sales of 4 million electrified vehicles in China by 2030, reaching a market share of around 15% and generating revenue of 3 billion euros.
The automaker’s R&D expenses were 21.8 billion euros in 2023 as it continues investing in developing new electrified models, many of which launched in China where competition in the EV segment is growing for overseas automakers.
Last week, Volkswagen announced plans to reduce vehicle costs by 40% in China and boost its competitiveness by 2026 by introducing a locally developed “China Main Platform” for EVs. Volkswagen says the platform will be key for achieving cost parity with local automakers in the compact electric vehicle segment that’s expected to account for 50% of the total auto market in the future.
