Volkswagen Group, the world’s largest carmaker by sales volume, recorded a 2.3% drop in deliveries for 2024, falling to just over nine million vehicles.
The decline reflects significant challenges in China, one of its biggest markets, where a fierce price war and shrinking demand have taken a toll.
Domestically, the automaker’s German sales also declined amid economic uncertainty.
While Volkswagen’s battery-electric vehicle (BEV) sales showed growth in China, outperforming a global decline in BEV sales, the overall results highlight the company’s struggle to balance its cost-cutting measures with competition in key markets.
Sales dip driven by China’s price war
Volkswagen’s performance in China, where deliveries fell by 10%, exemplifies the strain caused by heightened competition among automakers to capture the growing electric vehicle market.
China, accounting for a significant portion of Volkswagen’s global sales, has become a battleground as local automakers slash prices to gain market share.
Despite the challenges, Volkswagen reported an 8% rise in BEV sales in China, contrasting sharply with a 3.4% global decline.
This suggests that Chinese consumers remain open to adopting electric vehicles even amidst economic pressures.
Traditional internal combustion engine vehicles, which still make up a majority of Volkswagen’s portfolio, struggled to gain traction, contributing to the overall decline.
In Europe, the company’s second-largest market, Volkswagen’s sales improved slightly, with order intake in Western Europe up by 88% year-on-year, driven by new models such as the VW ID.7 Tourer and the Audi Q6 e-tron.
Yet, these gains could not offset the losses in China and Germany.
Volkswagen’s affordable brands show strength
Within the Volkswagen Group, not all brands suffered equally. The Skoda and SEAT/CUPRA divisions saw sales grow by approximately 7%, indicating a demand for more affordable vehicles.
Meanwhile, the flagship Volkswagen Passenger Cars division experienced a 1.4% decline, reflecting its ongoing struggle to maintain competitiveness in its core markets.
Premium brands such as Porsche and Audi also faced challenges in China and Germany, as wealthy consumers delayed big-ticket purchases amidst rising economic uncertainties.
However, upcoming models like the Porsche Macan Electric are expected to attract interest, especially as the group ramps up its electric vehicle offerings.
Volkswagen plans to release 30 new models across its portfolio this year, with a focus on electric and hybrid technologies.
These new offerings are part of the company’s long-term strategy to regain market share, particularly in Europe and North America, where it seeks to establish a stronger foothold in the growing EV segment.
Volkswagen’s efforts to counter the dip
Volkswagen’s cost-cutting initiatives have been pivotal in navigating the downturn. The company revised its 2024 sales forecast to around nine million vehicles in September, citing rising costs and intensifying competition in the EV market.
The namesake Volkswagen brand has been central to these cost-cutting efforts, aiming to boost profitability by streamlining production processes and reducing overheads.
While the BEV segment has shown promise, slower-than-expected adoption rates for electric vehicles globally have added another layer of complexity to Volkswagen’s recovery efforts.
The company’s ability to adapt to shifting consumer preferences and economic conditions will likely determine its performance in the coming years.
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