Wolfsburg, April 30, 2024 – Automaker Volkswagen faces a challenging start to 2024. The company announced a decline in both sales and profits for the first quarter on Tuesday, citing a combination of factors including a difficult situation in China and problems with launching new models.
Revenues fell by 1% year-on-year to nearly €75.5 billion. Operating profit dropped 20% to €4.59 billion, pushing down the operating margin to 6.1%, which is below the target set for the full year 2024. Profit after tax decreased by 22% to €3.71 billion.
Vehicle sales in Q1 dipped by 2% to 2.1 million units. Despite this decline, Volkswagen leadership reaffirmed its full-year guidance, expecting revenue growth of up to 5% and an operating profit margin between 7% and 7.5%.
Volkswagen attributes the weaker Q1 performance to lower sales volume and higher fixed costs. The company anticipates a strong March, solid order backlog, and improving order intake in recent months to translate into positive results as early as Q2.
Difficulties in China, the world’s largest auto market, significantly impacted Volkswagen. Ongoing lockdowns and supply chain disruptions in the country heavily affected the company’s production and sales.
Additionally, Volkswagen faced challenges with launching new models, leading to delays and extra costs.
Despite these obstacles, Volkswagen remains optimistic about its 2024 outlook. The company believes strong demand for its vehicles and rising prices will help offset the weaker start to the year.
Key Points:
- Q1 revenue down 1% to €75.5 billion.
- Operating profit down 20% to €4.59 billion.
- Profit after tax down 22% to €3.71 billion.
- Vehicle sales down 2% to 2.1 million units.
- Volkswagen reaffirms full-year guidance with expected revenue growth of 5% and operating profit margin between 7% and 7.5%.
- Weaker Q1 performance attributed to lower sales volume, higher fixed costs, China difficulties, and launch issues.
- Company expects a strong March, solid order backlog, and improving order intake to translate into positive results in Q2.
Source: Envato, Reuters
