Volkswagen Group Warns of Slowing Sales in 2024

The Volkswagen Group says it anticipates a modest 3% increase in global sales in 2024, marking a significant decline from the 12% lift in sales recorded in 2023, amid greater competition in the electric-vehicle sector, both in Europe and its largest single market, China.

During the German automaker's 2023 annual general meeting, Group CEO Oliver Blume (pictured, below left) acknowledges the persistent challenging global sales conditions but counters a gloomy economic forecast with the news it is preparing for the launch of up to 30 new models this year.

“We are preparing for the largest product offensive in the history of the Volkswagen Group,” Blume says.

The CEO’s positivity regarding the number of planned new-model launches is backed up by strengthening financial results. According to the Group’s annual report, the Core brand group, which includes Volkswagen passenger cars, Volkswagen Commercial Vehicle, SEAT, Cupra and Škoda brands, generated €137.8 billion ($150 billion) in revenue in 2023. That is just over 20% more than reported for 2022.

VW Core’s operating profit margin also improved, increasing to 5.3% from 3.6% the previous year. 

For the Progressive brand group -- Audi, Bentley, Lamborghini and the Ducati motorcycle brands -- revenues increased by a significant 13% to €69.9 billion ($76 billion).

In 2023, VW witnessed a 12% surge in deliveries, reaching a total of 9.24 million vehicles across its large portfolio of brands, which also includes Porsche.

Echoing sentiments of other industry players, Blume forecasts a demanding year ahead. Last month, Stellantis CEO Carlos Tavares also cautioned 2024 would be a “turbulent” year for global sales.

The Volkswagen Group discloses its expectations for an increase in vehicle orders across Western Europe in the coming months, attributed to the introduction of new models, including the new electric-powered ID.7 sedan and its wagon sibling, the ID.7 Touring, as well as new-generation Tiguan (pictured, below) and Passat models.

Amid plans to unveil 30 new models throughout 2024, the Volkswagen Group notes a promising start to the new year compared with last year.

But the introductions of VW’s new electric models coincide with decelerating growth in demand for electric cars in many key global markets.

VW is not alone in planning for a slower adoption of EVs by consumers. Mercedes-Benz recently announced a five-year delay in its electrification objectives and reiterated its commitment to continuing the production of internal-combustion-engine models into the next decade.

When questioned about the demand for EVs, Blume emphasizes their role in the future automotive landscape but underscores the Volkswagen Group’s adaptability to market fluctuations through its lengthy lineup of traditional ICE models.

Losses at the Group’s Cariad software division widened to €2.4 billion ($2.6 billion) in 2023. However, the company justifies the loss, saying Cariad invests in software development upfront and is compensated through licensing fees.

As part of efforts to make the Volkswagen Group more competitive, Blume says he has launched cost reduction programs for all brands. The goal is to cut costs by €10 billion and significantly increase margins.“I stand for ambitious goals and double-digit margins,” he explains.

Blume, who is CEO of both the Volkswagen Group and its sports car brand Porsche, received a salary of €9.71 million ($10.6 million) in 2023, as revealed in the automaker’s annual report.