Volkswagen Group forecast slowing sales growth in 2024, reflecting a weakening economic outlook, increasing competition and higher costs.
The automaker expects sales revenue to increase by up to 5 percent this year, after reporting a 15.5 percent increase last year to €322 billion ($349 billion).
Chief Financial Officer Arno Antlitz pointed to a "muted economic outlook and intense competition" but said the company was confident for the year as a whole.
The group. which owns brands including Audi, VW, Skoda and Bentley, said deliveries of battery electric vehicles increased by 35 percent in 2023 to 771,000 units, driven by growth in all regions.
Total group deliveries grew by 12 percent to 9.24 million, with Europe (+20 percent) and North America (+18 percent) as the main drivers. In China, the group's largest single market, deliveries to customers grew by 2 percent.
The share of battery-electric vehicle sales was 8.3 percent for 2023, compared to 6.9 percent in the previous year.
Lower spending
Kerrigan Advisors’ proprietary annual OEM Survey of over 100 executives reveals that the majority of respondents are worried about the financial impact of Chinese automakers’ growing global market share, and most expect that the EV transition to be slower than expected. The survey also queried executives on their outlooks for dealership valuations and profitability, as well as their expectations for the future of dealer networks and facility requirements.
VW is pushing forward with an ambitious savings plan at its namesake brand to raise margins and catch up to rivals such as Stellantis. That effort is even more urgent with slowing growth for electric cars and competition from cheaper Chinese models, other European carmakers and Tesla.
VW said in a statement on Friday it will trim €10 billion off its five-year rolling spending plan, bringing it to €170 billion, citing a tapering off of peak spending on both combustion engine models and EVs.
Fourth quarter revenue reached €87 billion, with an operating profit margin of 7 percent, the automaker said. Adjusted operating profit stayed roughly flat at €22.6 billion, taking into account negative effects from commodity hedging totaling €3.2 billion.
VW said it expects an operating margin of 7.0 percent to 7.5 percent in 2024.
The company said it is increasing its payout to ordinary and preferred shareholders by €0.30 per share, with the payout ratio of 28 percent missing the company's previous target of 30 percent.
Automakers have been feeding off pent-up demand following protracted supply-chain problems across the industry that have helped to offset growing economic challenges. High living and borrowing costs are expected to weigh on consumption this year, while China struggles with a property slump and weak business confidence.
Reuters and Bloomberg contributed to this report
