Volkswagen's Weak Sales Persist

2023 Author: Eric Donovan | [email protected]. Last modified: 2023-08-25 09:36

The VW Group is suffering from increasing weak sales. In addition to the decline in China, this is mainly due to the weakness of the core brand.

For the Volkswagen Group, there are currently big issues. First the Wolfsburg had to grapple with the week-long leadership crisis until the beginning of May. Then - just as the power struggle between VW major shareholder Ferdinand Piëch and Group boss Martin Winterkorn was over - everyday business brought a critical figure to light: In April, Volkswagen had to admit in mid-May, group sales fell by 1.3 percent compared to the same month last year.

It was the first minus since December 2009. For five and a half years, Europe's largest car manufacturer only increased. And now the cut followed. On Friday it was clear: In May the minus was even bigger. The main reason for this is the Chinese market, where the group sells a good third of all cars. While there was a mini plus of 0.2 percent as of April, the sales figure in May slipped into the red to 1.1 percent.

Core brand is not gaining momentum

In addition to China, the losses of the core car brand are a driver. It lost 5.9 percent in May comparison, as VW announced on Wednesday. That is a good percentage point less than in April. The house brand around the Golf and Passat represents around half of all group-wide deliveries. Unlike the entire group with its twelve brands, the core brand has been in reverse for the eighth month in a row. Despite all the sales successes of the VW family - for example at Porsche or Audi - the entire sales of the group, which broke the 10 million mark in 2014, stands and falls, especially with the core brand.

China is currently generally weak. The double-digit growth rates are over, at the moment there is more of a stagnation. The VW core brand lost 3.7 percent there in May. NordLB analyst Frank Schwope calls these figures "not convincing". The current drop in sales is also due to production changes in the Chinese VW plants. "On the other hand," says Schwope, "it cannot be ruled out that the downward trend will solidify in the year as a whole due to demand. The times of double-digit growth rates in China are likely to be over," he stated about VW's performance.

China board member Jochem Heizmann emphasized in a dpa interview a few weeks ago that only a brief setback was to be expected: "We are planning an average annual increase of five to eight percent over the next five years, although I tend to assume the upper value would." They want to keep up with market growth.

By 2019, there were 22 billion euros in investments for China in the pipeline - four billion more than in the previous planning round. "We could sell more if we had more capacity," said Heizmann. The Chinese worked more than 300 days a year. There is a lack of days off to introduce new models in the factory and to be able to adjust the production lines accordingly.

Big investments in China

And yet: The dent in sales is a setback for the Wolfsburg-based company, who has been spoiled for success for years. Industry observer Schwope says: "In the race with Toyota for the title of the world's largest automobile manufacturer, we see Volkswagen only slightly ahead. We expect 10.3 million sales for the Wolfsburg-based group in the full year, while Toyota should come to 10.2 million."

The key is clearly in China. Because in the second largest car market, the USA, VW is unlikely to really get going in the foreseeable future. As of April, the group remains there at minus 0.2 percent, although the market is actually growing. But new VW models especially for the USA will come to car dealerships in a year and a half at the earliest. Until then, the most important VW models in terms of volume have to be addressed: Jetta and Passat. But they recently lost double digits. According to calculations by Ferdinand Dudenhöffer from the Center Automotive Research at the University of Duisburg-Essen, VW's market share in the USA recently fell to 2.0 percent - and has thus been falling since 2012 (3.0 percent). Other important markets are also affecting the group - but the problems there are not homemade and affect the entire industry. South America lost 23 percent to Wolfsburg in the first five months, Russia 41 percent. And the good signs in Europe as a whole, which have recently increased by a good 3 percent, are not enough to counterbalance this.

So China remains the driving force. The German industry association VDA gives hope: After an increase of 13 percent in 2014, car sales in the Middle Kingdom gained 11 percent in the first quarter of this year. "For 2015 as a whole, we expect a growth rate of at least 6 percent, based on a significantly higher starting level," wrote the VDA in April at the auto show in Shanghai - thanks to China's emerging middle class. (dpa)