Volkswagen Group (VOW.DE) reported mixed results and pessimism, reflecting some of the serious challenges facing major multinational automakers as they grapple with cost cuts and an evolving market with choppy EV adoption. reported the outlook.
Volkswagen, whose portfolio includes Audi, Porsche and Bentley, reported second-quarter sales of 83.339 billion euros ($90 billion) compared to an estimated 81,697 euros, an increase of 4.1% year-on-year. Operating profit came in at 5,464 million euros ($5.9 billion), compared to the expected 5,486 million euros, which was slightly below expectations, but was down 2.4% year-on-year.
Operating profit, or operating margin, for the quarter was 6.6%, down from 7% in the same period last year, but higher than the 6.3% margin for the first half. Volkswagen said its results were affected by unplanned items such as severance payments at Volkswagen, and profit margins were hit by rising fixed costs, the closure of the gas turbine business and the downsizing of Volkswagen Bank in Russia. said.
Germany’s Volkswagen shares fell about 1% in late trading.
“Given our large number of excellent vehicles, brand portfolio and global reach, we expect a six-month profit margin of 6.3,” Volkswagen Group Chief Financial Officer and Chief Operating Officer Arno Antlitz said in a statement. % is below our goals and potential.” “However, in order to achieve our goals, we will have to make significant efforts on the cost front in the second half and beyond.”
Across sales regions, VW achieved overall growth in North and South America, the company said, largely offsetting losses in regions such as China. Global vehicle deliveries decreased 3.8% to 2,244,000 vehicles in the second quarter, reflecting higher financing revenues and an improved product mix.
CEO Oliver Bloom said: “In a challenging environment, 2024 marks the Group’s biggest product offensive and comprehensive restructuring of its business areas… However, much work still lies ahead of us.” he added.
German automakers have recently been using partnerships to reduce the cost and time-to-market of EVs, primarily focused on China. Volkswagen announced that it will partner with China’s XPeng to produce two new EVs bearing the Volkswagen brand, leveraging XPeng’s software and EV engineering.
Volkswagen’s luxury brand Audi also announced that it has signed a contract with China’s state-owned SAIC Motor Corporation to develop a new EV for the mainland.
Volkswagen ID.7 will be exhibited at the Beijing Motor Show on April 26, 2024. (WANG ZHAO/AFP via Getty Images) · WANG ZHAO via Getty Images
In the United States, Volkswagen announced that it will work with Rivian to develop next-generation software-defined vehicles that will be used in both companies’ future electric vehicles. Rivian will license its existing intellectual property rights to the joint venture, and Volkswagen will inject up to $5 billion through 2026.
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Just recently, Volkswagen reversed its policy and announced that the ID.7 EV sedan will not be introduced in the U.S., reflecting declining demand for EVs in the U.S., especially for vehicles that don’t fit crossover or SUV body styles. did.
Regarding the outlook, Volkswagen reiterated that sales revenue in 2024 will be 5% higher than the 2023 total. The operating profit margin was 7% from 6.5%, which the company lowered from 7% to 7.5% in July.
VW’s auto cash flow forecast in July was again between 2.5 billion euros ($2.7 billion) and 4.5 billion euros ($4.86 billion) due to investment and merger and acquisition activity, particularly the Rivian investment expected in the second half of the year. ) was revised downward. This year. VW’s previous cash flow forecast was 6.5 billion euros ($7.02 billion).
Volkswagen’s U.S. rivals such as Ford and GM also saw their stock prices fall following their second-quarter results. This comes as profits have already peaked and concerns that rising inventories could put pressure on prices as consumers bear the brunt of higher financing costs and overall inflation. It’s something that influenced me.
Toyota has maintained strong performance with high sales of hybrid vehicles and a cautious approach to EV product rollout, but slowing growth in all regions, particularly China, and declining inventories are hurting sales in the United States. Concerns caused the company’s stock to plummet on Thursday.
Pras Subramanian is a reporter for Yahoo Finance covering the auto industry. you can follow him × And also on Instagram.
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