Volkswagen maintains 2024 targets despite profit decline in first quarter

Volkswagen, Europe’s ace automakeron Tuesday restated its revenue and margin targets for 2024 after posting a 20% drop in first-quarter operating profit hit by lower sales and higher costs, as it prepares to launch a variety of new models.

The German automaker's luxury brand Porsche specifically reporteda 14.8% operating margin decline on higher model revamp investments and decreased demand for premium cars in China. Delivery delays at its luxury Audi brand contributed to decreasing company earnings.

According to media reports, Volkswagen said it aims to keep its Chinese market share roughly stable until 2030, investing largely to support sales despite a raging price war with local electric vehicle rivals.

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Adding to it, the automaker stated that its order book remains stable compared to the end of 2023; while orders for fully electric vehicles more than doubled in the first quarter compared to the same period last year.

CFO and COO of the Volkswagen Group Arno Antlitz stated, “As expected, our first quarter results show a slow start to the year. 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. We expect additional momentum over the course of the year from the launch of more than 30 new models across all brands”.

He added, “At the same time the effects (of) our efficiency programs will gradually unfold as the year progresses. In this context, it will be particularly important to vigorously counteract the increase in fixed costs and exercise investment discipline.”

The company expects 2024 sales revenue to increase up to 5% along with a full-year operating profit margin of between 7% and 7.5%.With increases in Asia-Pacific and South America offset by declines in Europe and North America, the company’s sales fell two percent in the first quarter.

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

Rising fixed costs also weighed on the carmaker.The German auto giant made a net profit of 3.7 billion euros from January to March on sales of 75.5 billion euros.

The company’s shares were down two percent on the Frankfurt Stock Exchange after the results.US-European rival Stellantis, whose 15 brands include Fiat, Jeep and Peugeot, also reported a heavy drop in first-quarter sales on Tuesday, stating they fell 12 percent to 41.7 billion euros.

(With inputs from Reuters)