Volkswagen profits fall in ‘slow start to year’

FRANKFURT, April 30 — Volkswagen reported today a more than 20-per cent fall in first-quarter profits as sales slipped but stuck to its 2024 targets, insisting new models will provide a boost.

The 10-brand German auto giant made a net profit of €3.7 billion (RM19 billion) from January to March on sales of €75.5 billion.

“Our first quarter results show a slow start to the year,” said Arno Antlitz, VW’s chief financial officer.

Volkswagen’s sales fell two per cent in the first quarter, with increases in Asia-Pacific and South America offset by declines in Europe and North America.

Deliveries of its less expensive — but less profitable — Volkswagen, Skoda and Seat cars increased. But deliveries of pricier Porsche and Audi models fell.

Rising fixed costs also weighed on the carmaker.

But Antlitz struck an upbeat note, pointing to improving orders as well as “additional momentum over the course of the year from the launch of more than 30 new models across all brands”.

VW confirmed its previously announced outlook for 2024, with sales revenue expected to grow by up to five per cent.

Its shares were down two per cent on the Frankfurt Stock Exchange after the results.

US-European rival Stellantis, whose 15 brands include Fiat, Jeep and Peugeot, also reported a shard drop in first-quarter sales today, saying they fell 12 per cent to €41.7 billion.

Volkswagen reported a fall in deliveries of electric vehicles in the quarter of 3.3 per cent, a setback after big rises across 2023 and a further sign of a broader slowdown in the EV market.

But VW offered assurances the drop was only temporary, point out that orders for fully electric vehicles had doubled in the first quarter on year.

Orders are expected to remain at the same level until summer, and then increase with the release of new models, it said.

Volkswagen has poured huge sums into the shift to electro mobility but is making slow progress due to tepid demand and fierce rivalry, especially from homegrown carmakers in its biggest market China.

Volkswagen also hopes that plans to cut costs and boost its squeezed profit margins will bear fruit later in 2024.

Last year, it announced plans for a €10-billion savings programme and has flagged cuts to its workforce over the coming years.

“The effects of our efficiency programmes will gradually unfold as the year progresses,” said Antlitz, adding it was “important to vigorously counteract the increase in fixed costs”. — AFP