The Volkswagen Group has achieved significant delivery and revenue growth in the first nine months of 2023. Deliveries for the first three quarters increased by 11% year-over-year to reach 6.7 million vehicles, with Q3 deliveries rising by 7% to 2.3 million units compared to the previous year. The revenue for the first three quarters amounted to €235.1 billion, reflecting a 16% increase (Q3 2023: €78.8 billion, +12%).

At the end of Q3, the order volume remained high in Western Europe at 1.4 million units.

Net liquidity in the automotive sector was maintained at a solid €36.7 billion.

Arno Antlitz, CFO and COO of the Volkswagen Group, stated, “The group continues to show solid performance overall, with sales and profits increasing again in Q3. However, the profitability in Q3 did not reach the targets we had hoped for, so we cannot be satisfied. The group is currently focused on systematically implementing the 10-point plan and performance programs between brands.”

The operating profit of the group for the first nine months of the year decreased by 7% compared to the previous year, amounting to €16.2 billion, with an operating margin of 6.9%. The operating profit for Q3 was €5 billion, reflecting a 17% year-over-year increase, with an operating margin of 6.2%. This progress was largely due to losses from raw materials and other derivatives, which reached €2.5 billion (2022: +€0.8 billion). When factoring in these valuations, the group’s operating profit for the first three quarters of 2023 would have increased by €2 billion to €18.7 billion, resulting in an operating margin of 8.0%, almost consistent with the previous year.

In Q3, the significant increase in passenger car sales positively impacted overall performance. However, this was offset by increased costs due to production interruptions from suppliers caused by floods in Slovenia and rising product costs, particularly impacting the core brand group.

Despite logistical bottlenecks, the net cash flow for the first nine months, including €2.5 billion in Q3 alone, was recorded at €4.9 billion, showing only a slight decrease compared to the previous year.

On October 20, the Volkswagen Group updated its 2023 fiscal year outlook. The group expects the number of vehicles delivered to customers to reach 9 to 9.5 million. Revenue is projected to increase by 10% to 15% compared to the previous year.

With ongoing developments in raw materials and product markets remaining unpredictable, the group anticipates that the annual operating performance for 2023 will be around €22.5 billion, excluding special items, consistent with last year’s results.

Net cash flow in the automotive sector is expected to significantly increase year-over-year, with net liquidity for the sector remaining between €35 billion and €40 billion.

From January to September, the deliveries of battery electric vehicles (BEVs) increased by 45% year-over-year, reaching 531,500 units. The proportion of electric vehicles in total deliveries rose to 7.9%, with a market share of 9% in Q3 alone. This indicates the potential to meet the annual target of achieving an 8% to 10% share of total deliveries. Europe remained a key growth driver for the BEV segment, with 341,100 units delivered from January to September, marking a 61% increase. The U.S. market saw a 74% increase with 53,000 BEVs delivered, while China recorded a 4% increase with 117,100 units, exceeding last year’s levels.

The Volkswagen-owned battery manufacturer PowerCo and the Belgian materials technology group Umicore announced their joint venture, IONWAY, to build a cathode material plant in Nysa, Poland. This partnership aims to produce locally sourced and sustainable battery materials. Both companies plan to produce materials for cathodes and precursors capable of providing an annual cell capacity of 160 gigawatt-hours by 2030, equivalent to the production capacity needed for approximately 2.2 million electric vehicles each year. The cathode materials required for the PowerCo cell plant in Salzgitter, which will commence production in 2025, will be secured from Umicore’s existing production capabilities in Nysa.

The electric vehicle ID.7 has been selected by a jury of German and international automotive journalists as the “2024 German Car of the Year.” This award reaffirms the performance of Volkswagen Group’s Modular Electric Drive Matrix (MEB).

Last September, Volkswagen unveiled the next-generation model of the Tiguan, currently one of its most successful models. The third-generation model of the best-selling SUV will commence production in Volkswagen’s Wolfsburg plant in fall 2023 and is expected to be available for sale in the first quarter of 2024.

The ID.4 and ID.5 models have undergone key updates, including a new infotainment system, improved performance, and new electric drives with extended range.

Audi added several models to the Q8 product line in Q3. The SQ8 e-tron is the new flagship model in the pure electric SUV and crossover segment, debuting in September 2023 with modern and powerful TDI and TFSI engines.

Porsche expanded its hybrid lineup for the Cayenne series, the brand’s best-selling model, to three new variants in September 2023. These new models are part of a successful third generation SUV that has achieved fundamental improvements through extensive measures in powertrain, design, and components.

Group-wide performance programs aimed at strengthening brand competitiveness

All brands under the group have initiated ambitious performance programs aimed at securing a long-term operating profit margin of over 10%. In the coming weeks, the developmental potential of each brand will be quickly identified and executed. These performance programs are continuously implemented to enable all brands and brand groups to respond specifically to market changes and to better adapt to external factors related to profitability.

Core (Volkswagen, Volkswagen Commercial Vehicles, Skoda, SEAT/Cupra)

The revenue of the Core brand group for January to September reached €101 billion, reflecting a 24% increase (Q3 2022: €32.3 billion, +13.9%). Operating profit stood at €5 billion, a 34% increase over the previous year (Q3 2023: €1.2 billion, +11.7%). Despite stable pricing, the positive sales performance in Q3 was not sufficiently reflected in operating profit due to rising product costs, resulting in an operating profit margin of 4.9%. This was particularly influenced by production interruptions from suppliers due to floods in Slovenia in Q3.

This negative impact was especially pronounced in the operating profit margin of the Volkswagen brand, which stood at 3.4% for the first nine months (2022: 4.7%). In contrast, Skoda saw significant improvement with a margin of 6.4% (2022: 5.6%), SEAT/Cupra at 4.6% (2022: -0.1%), and Volkswagen Commercial Vehicles at 6.1% (2022: 4.5%).

Progressive (Audi, Lamborghini, Bentley, Ducati)

The revenue of the Progressive brand group increased by 13% year-over-year to €50 billion (Q3 2023: €16.2 billion, +10.3%), with an operating profit margin of 9.1% (Q3 2023: 7.4%). Operating profit amounted to €4.6 billion (2022: €6 billion), with most of the decrease attributed to negative valuation effects, particularly derivative evaluation losses amounting to €0.9 billion. The basic operating profit margin for the first nine months stood at 10.9% (2022: 12.8%).

Sport Luxury (Porsche)

In the Sport Luxury brand group, the operating profit margin for Porsche’s automotive sector remained high at 18.8% (Q3 2023: 18.0%). Operating profit increased by 9% due to a rise in vehicle sales, a positive product mix, and pricing effects (Q3 2023: +7.7%). The net cash flow in the automotive sector reached €3.4 billion.

Trucks (MAN, Scania, Navistar, Volkswagen Trucks and Buses)

TRATON recorded sales of €33 billion in its vehicle and service sectors, reflecting a 19% increase year-over-year (Q3 2023: €11 billion, +6.4%). The sales growth was driven by increased sales volume and a positive price/product mix, as well as growth in the vehicle service sector. The operating profit of the vehicle and service sector significantly improved to €2.7 billion (Q3 2023: €900 million). The operating profit margin for this sector from January to September increased to 8% (Q3 2023: 7.8%), primarily driven by fixed cost improvements resulting from sales volume increases and a positive price/product mix offsetting input cost increases.

Financial Services

The revenue of the Financial Services sector increased by 8% year-over-year to €37.6 billion (Q3 2023: €13.4 billion). However, operating profit decreased by 40% to €2.5 billion (Q3 2023: €800 million), mainly as a result of increased interest costs and unfavorable exchange rate trends.

CARIAD

CARIAD saw a 29% increase in revenue for the first three quarters of this year (Q3 2023: +24%). However, operating profit decreased due to a focus on software releases.

By Lee Sang-jin daedusj@autodiary.kr