German carmaker Volkswagen reported a 20% drop in operating profit in the first quarter of 2024, with operating profit totaling 4.6 billion euros. This decline was attributed to lower sales, higher fixed costs, and an unfavorable country, brand, and model mix. Vehicle sales were down 2% in the first quarter, reaching 2.1 million units. Despite the slow start to the year, Volkswagen still expects to meet its 2024 financial targets, including a 5% increase in sales revenue and a full-year operating margin between 7% and 7.5%.
Volkswagen Group CFO and COO Arno Antlitz acknowledged the slow start to the year but expressed confidence in the company’s ability to achieve its financial targets. He highlighted the launch of more than 30 new models across all brands throughout the year, as well as the anticipated benefits from efficiency programs gradually taking effect. These initiatives are expected to provide additional momentum as the year progresses, supporting Volkswagen’s goal of reaching its financial targets despite the challenges faced in the first quarter.
The decrease in operating profit was primarily driven by weaker demand for Volkswagen’s premium brands, resulting in lower sales figures and higher fixed costs. The company also cited an unfavorable country, brand, and model mix as contributing factors to the profit decline. Despite these challenges, Volkswagen remains optimistic about its financial outlook for 2024 and is focused on implementing measures to boost sales revenue and achieve its operating margin targets for the year.
Antlitz emphasized the importance of efficiency programs and the launch of new models in driving growth and improving financial performance for Volkswagen. The company anticipates that these initiatives will generate additional momentum over the course of the year, helping to offset the impact of the slow start in the first quarter. By leveraging these strategies and capitalizing on the strength of its brand portfolio, Volkswagen aims to position itself for success and maintain its position as a leading player in the automotive industry.
While the first quarter results may have been below expectations, Volkswagen remains steadfast in its commitment to achieving its financial targets for 2024. The company’s focus on innovation, efficiency, and product development is expected to drive growth and enhance profitability in the coming months. With a strategic roadmap in place and a strong portfolio of brands, Volkswagen is well-positioned to navigate challenges in the market and capitalize on opportunities for expansion and success.
In conclusion, Volkswagen’s first-quarter operating profit decline reflects challenges in demand for premium brands and an unfavorable mix of factors impacting sales. Despite this setback, the company remains confident in its ability to achieve its financial targets for 2024 through the launch of new models and efficiency programs. By leveraging its strengths and strategic initiatives, Volkswagen aims to overcome the challenges of the first quarter and maintain its position as a competitive player in the global automotive market.
