Dive Brief:
- Volkswagen Group’s operating revenue in the first nine months of the year fell 21% ($3.6 billion), from 16.2 billion euros ($17.6 billion) in 2023 to 12.9 billion euros ($14 billion) in the first nine months of 2024, the company announced in its earnings report Oct. 30.
- The automaker attributed the decline to fewer sales, which totaled 6.5 million vehicles globally year to date in 2024, a 4% drop compared to the same period in 2023.
- “Our nine-month results reflect a challenging market environment and underline the importance of delivering on the performance programs we have launched across the Group,” Volkswagen Group CFO and COO Arno Antlitz said in the release.
Dive Insight:
The automaker cited restructuring expenses for its passenger cars business, higher fixed costs and new product investments for the decline in quarterly and YTD revenue, according to the release.
Volkswagen’s Q3 revenue declined by 41.7% year over year from 4.9 billion euros ($5.3 billion) to 2.8 billion euros ($3 billion).
Antlitz said Volkswagen reported an operating margin of two percent after nine months, highlighting the need for “significant cost reductions and efficiency gains.”
“We've not forgotten how to build great cars, but the costs, specifically in our German operations and factories, are far from being competitive,” Antlitz said during the company’s earnings call. “This is where things cannot continue as they are now.”
Despite Volkswagen’s challenges, the automaker reported a modest 1% YoY increase in gross revenue for the first nine months of 2024, reaching 237.3 billion euros ($257.7 billion), citing growth in its financial services business for modest gains.
But as Volkswagen faces headwinds from higher costs and declining sales in the China market, the company, along with automakers, sees opportunities for long-term growth in the electrified vehicle segment, which include both EVs and hybrids.
Volkswagen delivered 506,529 all-electric vehicles (including commercial vehicles), in the first nine months of 2024, a 4.7% YoY decline, citing “industry-wide buyer reluctance” for the sales drop. However, the automaker’s hybrid vehicle sales increased by 9.1% from a year ago to 191,714 units, pushing its electrified vehicle sales mix to 10.7% of its global vehicle sales.
For the full year, VW expects its vehicle deliveries to reach 9 million units, a slight decline from 9.2 million units in 2023. Total revenue for 2024 is projected to reach 320 billion euros with a profit margin of around 5.6%.
Antlitz is confident Volkswagen’s vehicle lineup of internal combustion and hybrid and full-electric vehicles will help the company reach its long-term strategic goals.
“A significantly improved order intake in Western Europe in Q3 year-on-year is testament to our strengthened product line-up, from combustion engine cars to hybrids and full-electric vehicles and provides tailwind for the final quarter,” he said.
