Brand Group Core with stable sales revenue and product offensive in first half of 2024 – High fixed costs and one-off effects significantly impact profitability of Volkswagen brand

In a year shaped by a persistently weak economic environment, more intense competition and political challenges, the Brand Group Core continues to focus on successful model ramp-ups and execution of the performance programs in the various brands. The Brand Group plans to boost profitability in the second half of the year through a clear focus on strict cost efficiency and the realization of synergies generated by cooperation, as well as through growth.

“The Brand Group Core made progress with its performance programs in the first half of 2024. However, despite all the cost-cutting measures already underway we need to reduce our fixed costs still further in order to stay firmly on course in this difficult market environment. The additional headwind is clearly evident in our key figures, particularly for the Volkswagen brand: fixed costs have risen in the first half of the year – and could not be offset by vehicle sales or sales revenue. Moreover, provisions for termination agreements at Volkswagen AG also affected earnings. Without special items we would have achieved an operating margin of 6.0% for our Brand Group Core, but we cannot afford to be satisfied with this performance, also bearing in mind that the share of electric vehicles – with their current lower margins – will increase going forward. It is vital that we continue to do all we can to execute our performance programs – and above all to systematically tap into the synergies between the brands in the Brand Group Core.”

Thomas Schäfer
Member of the Board of Management of Volkswagen AG, Head of the Brand Group Core & CEO of the Volkswagen Passenger Cars brand

“The figures for the Volkswagen brand show very clearly that, even taking the special items into account, our efforts so far to reduce costs are not sufficient. High fixed costs and one-off effects are significantly impacting profitability. Measures under the performance programs are already underway, but we still have a tough road ahead of us – and must remain consistent in order to secure the financial leeway needed for future investments and jobs on a sustainable basis.”

Patrik Andreas Mayer
Member of the Board of Management of the Volkswagen Brand responsible for “Finance”

Key figures

Outlook

In a year shaped by a persistently weak economic environment, more intense competition and political challenges, the Brand Group Core continues to focus on successful model ramp-ups and execution of the performance programs in the various brands. The Brand Group plans to boost profitability in the second half of the year through a clear focus on strict cost efficiency and the realization of synergies generated by cooperation, as well as through growth. The performance programs in the brands are already expected to have an increasing effect on earnings in the coming months.

The Brand Group Core reached several milestones in the first half of the year with the launch of attractive model innovations such as the Tiguan, Golf, T-Cross and the all-electric Volkswagen ID.7 Tourer. At the same time, as expected, earnings were affected during the early stages of these new models. The Brand Group Core therefore anticipates significantly more positive momentum in the coming months, as the market presence of the new models intensifies.

The Brand Group Core remains on course to meet its target of lifting the operating return to 8 % from 2026: to this end, the Brand Group is placing a clear focus on the strict execution of the performance programs to reduce costs and boost productivity, and on further reducing complexity, shortening development cycles and systematically tapping into synergy potentials.

Overview of the brands in the Brand Group Core

Volkswagen Passenger Cars

Volkswagen Passenger Cars delivered 1,518,756 vehicles in the first half of the year, 0.3% down on the comparable prior-year period. Sales revenue decreased by 1.8% to 42.2 billion euros. The 41.1% decrease in operating profit before special items to 966 million euros is attributable to higher wages, provisions for termination agreements and ramp-up costs. As a result, the operating return for the first half of 2024 decreased to 2.3% (previous year: 3.8%).

Škoda Auto

Škoda Auto posted solid sales revenue and financial results in the first six months of 2024. Deliveries grew 3.8 % to 448,600 units and the financial data underscore the brand’s strong position: operating profit increased to 1.147 billion euros (2023: +25.9 %), sales revenue ran at 13.652 billion euros, thus continuing on a similar level to H1 2023 (-0.7 %), and the operating return increased to 8.4 % (6.6 %). For the first time, Škoda ranked fourth in European registrations, confirming that its balanced mix of ICEs, plug-in hybrids and BEVs is welcomed by customers.

SEAT/CUPRA

SEAT/CUPRA reported strong volume growth in the first half of 2024, with vehicle deliveries running at 344,313 units, an increase of 8.5% compared with the same prior-year period. Sales revenue grew 4.6% to 7.8 billion euros. Operating profit before special items grew 9.4% to 406 million euros, and the operating return grew 0.2% to 5.2%. These figures confirm the growing popularity of the SEAT/CUPRA model range.

Volkswagen Commercial Vehicles

Volkswagen Commercial Vehicles (VWN) got off to a strong start in the first half of 2024. Unit sales grew by some 9% to 231,262 vehicles, with sales revenue growth on a similar level, coming in at 8.1 billion euros. Operating profit before special items increased to 641 million euros (+42.9%), despite the charges from provisions for termination agreements. The operating return was therefore 7.9% (+1.9ppt).

Key figures for the Brand Group Core 

 Key figures for the brands belonging to the Brand Group Core1):

SOURCE: Volkswagen Group