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Amid a tough economic climate, heightened competition, and political hurdles, the Brand Group Core remains committed to successful model rollouts and the implementation of performance initiatives across its brands. To enhance profitability in the latter part of the year, the Brand Group focuses on stringent cost controls, leveraging cooperative synergies, and fostering growth.
“While progress was made with the performance plans in the initial months of 2024, it is imperative to further reduce fixed expenses to navigate the challenging market conditions effectively. The rise in fixed costs, especially for the Volkswagen brand, and the impact of termination agreements at Volkswagen AG have curtailed earnings. Striving for an operating margin of 6.0% without such exceptional items, we must continue to push the boundaries to execute our performance strategies effectively, given the expanding share of electric models with narrower margins in our sales mix. Unleashing synergies within the Brand Group Core is vital to our success.”
Thomas Schäfer
Member of Volkswagen AG’s Management Board, Heading the Brand Group Core, & CEO of Volkswagen Passenger Cars
“The financial results for the Volkswagen brand unmistakably highlight the ongoing impact of high fixed costs and exceptional charges on profitability. While steps have been taken under the performance plans, more efforts are needed to secure our financial flexibility for future investments and job security.”
Patrik Andreas Mayer
Volkswagen Brand Management Board Member overseeing “Finance”
Performance Metrics
| Vehicle deliveries in the first half totaled 2.49 million units, a slight increase from 2.45 million in H1 2023.
Brand Group Core revenue reached 69.1 billion euros, compared to 68.8 billion in H1 2023. |
Sales rose by 1.8% year-on-year, with a notable uptick in Q2/24 following a steady Q1/24.
SEAT/CUPRA and Volkswagen Commercial Vehicles registered impressive volume growth. Despite a competitive market, revenue remained stable with modest sales growth. |
| The Brand Group Core’s operating earnings declined by 8.2% to 3.5 billion euros in H1 2024, down from 3.8 billion euros in H1 2023. | Higher labor costs due to pay hikes, termination agreement provisions at Volkswagen AG, ramp-up expenses for new models, and supply chain challenges weighed on operating profit, offsetting volume growth. |
| The Brand Group Core’s profit margin stood at 5.0% in the first half, a decrease from 5.5% in H1 2023. | Excluding termination agreement provisions, the adjusted operating margin was 6.0%, surpassing the prior-year level. |
| Net cash flow decreased by 21.6% to 2.0 billion euros compared to the same period last year. | Elevated inventories due to new model launches and higher receivables led to the decline in net cash flow. |
Prospects Ahead
Amidst economic uncertainties and tough competition, the Brand Group Core remains committed to boosting profitability by emphasizing cost efficiency, fostering synergies through collaboration, and driving growth. The ongoing performance initiatives are expected to yield improved earnings in the upcoming months.
The Brand Group Core achieved significant milestones in the first half with the introduction of attractive models like the Tiguan, Golf, T-Cross, and the all-electric Volkswagen ID.7 Tourer. Initial earnings were impacted as projected during the launch stages of these models, with a more positive outlook expected as these models gain traction in the market.
The Brand Group Core is on track to achieve its goal of attaining an 8% operating margin by 2026. To achieve this, the focus remains on executing performance strategies rigorously to drive down costs, enhance productivity, reduce complexity, shorten development cycles, and leverage synergies effectively.
Brand Group Core Brands Overview
Volkswagen Passenger Cars
Volkswagen Passenger Cars delivered 1,518,756 units in the first half of the year, a modest decline of 0.3% compared to the previous year. Revenues dipped 1.8% to 42.2 billion euros, with operating profit before special items decreasing by 41.1% to 966 million euros, reflecting higher wages, termination agreement provisions, and ramp-up costs. The operating margin for H1 2024 dropped to 2.3% from 3.8% in the previous year.
Škoda Auto
Škoda Auto displayed robust performance in the first half of 2024. Unit deliveries grew by 3.8% to 448,600 units, with operating profit surging to 1.147 billion euros (a 25.9% increase from 2023). Sales revenue maintained stability at 13.652 billion euros, a marginal decrease from H1 2023. The operating margin improved to 8.4% from 6.6%, positioning Škoda as the fourth-largest brand in European registrations.
SEAT/CUPRA
SEAT/CUPRA witnessed strong volume growth in H1 2024, with deliveries reaching 344,313 units, an 8.5% increase year-on-year. Sales revenue also rose by 4.6% to 7.8 billion euros. Operating profit before special items grew by 9.4% to 406 million euros, and the operating margin expanded to 5.2%. These results underscore the growing popularity of the SEAT/CUPRA models.
Volkswagen Commercial Vehicles
Volkswagen Commercial Vehicles (VWN) initiated the year on a positive note. Unit sales surged by around 9% to 231,262 vehicles, accompanied by an 8.1 billion euros sales revenue. Operating profit before special items continued to manifest a stable growth trajectory.
The total amount surged to 641 million euros (+42.9%), despite incurring costs from provisions related to termination agreements. Consequently, the operating profit margin stood at 7.9% (+1.9ppt).
Essential statistics for the Core group of Brands
| Key metrics | First Half of 2024 | First Half of 2023 | Change
1H 24 / 1H 23 |
|||
| Units sold (in thousands) | 2,494 | 2,450 | 1.8% | |||
| Revenue from sales | 69,051 million € | 68,764 million € | 0.4% | |||
| Operating profit pre-special items (inclusive of restructuring actions) |
3,462 million € |
3,773 million € |
-8.2% |
|||
| Operating return pre-special items (inclusive of restructuring actions) |
5.0% |
5.5% |
-0.5%-points |
|||
| Net cash flow | 2,005 million € | 2,559 million € | -21.6% |
Crucial figures for the brands under the Core Brand Group1):
| Units sold | Revenue from sales | Operating profit | Operating return | ||||||||||||||
| 000 units/mill. | 1H/24 | 1H/23 | 1H/24 | 1H/23 | 1H/24 | 1H/23 | 1H/24 | 1H/23 | |||||||||
| VW Passenger Vehicles | 1,518,756 | 1,523,285 | 42,194 | 42,952 | 966 | 1,641 | 2.3% | 3.8% | |||||||||
| Škoda Auto | 547,690 | 545,461 | 13,652 | 13,748 | 1,149 | 911 | 8.4% | 6.6% | |||||||||
| SEAT/CUPRA | 344,313 | 317,395 | 7,752 | 7,411 | 406 | 371 | 5.2% | 5.0% | |||||||||
| VW Commercial Vehicles | 231,262 | 211,747 | 8,087 | 7,417 | 641 | 448 | 7.9% | 6.0% | |||||||||
SOURCE: Volkswagen Group
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