Volkswagen Group sees first quarter earnings slide as car sales stall

This is the Volkswagen logo on a Volkswagen automobile on display at the Pittsburgh International Auto Show in Pittsburgh, Feb. 15, 2024.
This is the Volkswagen logo on a Volkswagen automobile on display at the Pittsburgh International Auto Show in Pittsburgh, Feb. 15, 2024. Copyright Gene J. Puskar/Copyright 2024 The AP, All Rights Reserved
Copyright Gene J. Puskar/Copyright 2024 The AP, All Rights Reserved
By Indrabati Lahiri
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Mercedes-Benz also saw falling profits, as expected, due to changes in models and supply chain issues, while Stellantis also missed earnings expectations due to a poor product mix.


Volkswagen Group has reported a 20% year-on-year drop in first quarter operating profit for 2024, as falling sales and increasing costs continued to bite. In addition, a disappointing brand, country and model mix also added to dampened results.

The group's sales volume for the same quarter was down 2% compared to the corresponding quarter in 2023, which sold 2.1 million units. Sales revenue also decreased 1% year-on-year to €75.5 billion, with operating profit falling 20% to €4.6 billion.

In the first quarter of the year, the South American market saw a 19% growth, with the Asia-Pacific market seeing a 2% increase. However, North American sales dropped by 10%, and sales for Europe and the rest of the world slid by 5%.

Volkswagen Group has maintained its outlook for 2024, expecting a sales revenue rise of up to 5% and an operating margin increase of 7% to 7.5%.

Arno Antlitz, the chief operating officer (COO) and chief financial officer (CFO) of Volkswagen Group said in a statement: "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.

"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."

Mercedes will not cut vehicle prices despite lower profits

Mercedes-Benz also reported its first quarter earnings on Tuesday, with the company seeing Q1 profits fall, as expected, because of supply chain issues and model changes. However despite this, the company has made it clear it will not be cutting prices.

Mercedes saw Q1 2024 earnings before interest and tax (EBIT) fall 30% to €3.86 billion, slightly below London Stock Exchange Group (LSEG) analyst estimates of €3.87 billion.

However, the company's industrial arm's free cash flow increased 3.2% year-on-year to €2.23 billion, due to favourable conversation rates.

Harold Wilhelm, the CFO of Mercedes-Benz Group AG, said in a statement: "Mercedes-Benz delivered a solid free cash flow in the first quarter, thanks to our disciplined go-to-market approach, our desirable products and despite the volatile economic environment and external challenges. While we remain vigilant about the global macroeconomic and geopolitical outlook, we confirm our full-year financial targets for 2024."

Stellantis expects to launch several more battery electric vehicles in 2024

Stellantis, the parent company of Peugeot, Fiat, Vauxhall and Chrysler, and other makes, also revealed its Q1 2024 results on Tuesday, with the company falling short of profit expectations because of a poor product mix, as well as unfavourable foreign exchange rates and declining volumes.

The company saw a 12% slide in revenue year-on-year for the first quarter, with net revenue coming in at €41.7 billion, missing market estimates of €42.6 billion.

However, global battery electric vehicle (BEV) and low emission vehicle (LEV) sales advanced 8% and 13% year-on-year respectively, with the company planning to launch several more BEVs in the upcoming months.

Stellantis' ordinary dividend climbed 16% for the quarter, reaching €1.55 per share, payable on 3 May. It also revealed a €3 billion share repurchase programme, to be wound up by the end of the year.

Natalie Knight, the CFO of Stellantis said in a statement: "While Q1 2024 year-over-year shipments and net revenues comparisons were difficult due to transitions in our next generation product portfolio manufactured on new platforms, we are delivering clear improvements in key commercial dynamics with customer sales outpacing shipments.

"We are reducing inventories to reinforce our strong relative pricing ahead of our new or mid-cycle product launches this year in key regions. During Q1 2024, we have introduced four new models out of our full-year launch plan of 25 models, including 18 BEV nameplates, which we believe sets the stage for materially improved growth and profitability in the second half of the year."

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