Source: AFP
German auto giant Volkswagen on Wednesday reported a disastrous 2023 profit rise as vehicle deliveries rebounded, but warned of slower sales growth this year, sending its shares tumbling.
The 12 percent increase in deliveries marked a recovery after three straight years of decline linked to production disruptions caused by shortages of key components.
Net profit rose 13.1 percent from a year earlier to 17.9 billion euros ($19.6 billion). Sales meanwhile rose more than 15 percent to 322.3 billion euros.
The 10-brand group — which includes Audi, Porsche and Skoda — posted particularly strong sales in Europe and North America.
In China, sales rose modestly but at a slower pace than last year, offering the latest evidence that Volkswagen is losing ground in its most important market.
Volkswagen fell behind its domestic rivals in China, losing its title as the best-selling car brand to BYD.
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The auto giant’s outlook for 2024 was also very subdued. It expects vehicle deliveries to pick up in 2024, forecasting modest growth of up to 3% due to tougher international competition and potential supply chain issues.
Similarly, sales growth is expected to reach 5%, much lower in 2023.
“Persistently high inflation in major economic areas and the accompanying tight monetary policy measures taken by central banks are expected to dampen consumer demand,” he warned.
“Continued geopolitical tensions and conflicts weigh on growth prospects; risks are linked in particular to the Russia-Ukraine conflict and confrontations in the Middle East.”
Volkswagen shares fell more than 3.5 percent in Frankfurt after the results were released.
Stagnation of electric gear shifting
Volkswagen also warned that there could be declines in demand “likely to be exacerbated by media reports or poor communication”.
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The carmaker came under fresh pressure last month over its operations in China’s restive Xinjiang region after financial newspaper Handelsblatt reported that forced labor may have been used to build a test track there in 2019.
After the report, Volkswagen said it was in talks with its Chinese joint venture partner SAIC “about the future direction of business activities in Xinjiang”.
Source: AFP
Volkswagen CEO Oliver Blum said on Wednesday that the company takes such claims “very seriously” but “so far, we have not been able to confirm the information provided.”
As for the future of the business, Blume insisted that Volkswagen had a “responsibility” to the workers at the joint venture in Xinjiang.
Volkswagen last year singled out China and the United States as key markets for its future growth, and is also looking to increase profit margins.
Volkswagen sold 771,000 battery cars in 2023, 35% more than the previous year, but still only 8.3% of the group’s total sales.
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The auto industry has plowed huge sums into producing more electric vehicles, but there have been concerns that this shift is lagging, amid weak demand and a weak global economy.
In recent months, Volkswagen has flagged plans to cut its workforce and also unveiled a 10 billion euro savings plan as it seeks to boost profitability and restart its faltering electric shift.
Its profit margins are falling to seven percent, below its long-term target of between 9 and 11 percent.
Source: AFP