Volkswagen Prioritizes Profit Margins Despite Lower Demand for Electric Cars

GERMANY: The Volkswagen Group, a leading global automotive manufacturer, has experienced a surprising dip in demand and sales for their electric vehicles (EVs). However, the company remains resolute in maintaining pricing strategies to safeguard margins and ensure profitability.

In their recently released nine-month financial report, Volkswagen disclosed that their order bank in Western Europe encompasses a substantial 1.4 million vehicles, with approximately 150,000 being all-electric. This figure marks a significant 50 percent decline from a year ago, when the company boasted 300,000 electric vehicle orders.

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Arno Antlitz, Chief Financial Officer and Chief Operating Officer of Volkswagen Group, observed that orders saw a gradual uptick in Q3 compared to the first half of the year, and this trend is anticipated to persist.

While this is a positive sign, the true test lies in whether this growth will be robust enough to fuel the expansion of the company’s electric car division.

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Notably, Volkswagen’s battery electric vehicle (BEV) sales for the first nine months of the year totalled 531,500, reflecting a substantial 45 percent year-over-year increase. This constitutes roughly 7.9 percent of the total volume.

The European market plays a pivotal role, accounting for 64 percent of all VW Group’s BEV sales (341,100). Therefore, any challenges faced in Europe can significantly impact overall results.

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With a target set to achieve an 8–10 percent BEV market share in 2023, the Volkswagen Group appears to be steadily progressing towards its goal, boasting a 9.0 percent share in Q3.

Attaining this target in Western Europe seems promising, as the order bank numbers indicate that out of 1.4 million vehicles, 150,000 are BEVs. This implies that over one in 10 new vehicle orders is electric.

Meanwhile, in the U.S., the Volkswagen ID.4 accounts for nearly 12 percent of the brand’s total volume for the first nine months of the year.

In the rapidly evolving Chinese market, Volkswagen is currently grappling with a loss of market share. Arno Antlitz anticipates that this trend will persist for the next one to two years, until the introduction of new models developed in collaboration with XPeng.

Also Read: Mahindra Partners with Volkswagen for Cutting-Edge Electric Motors to Power Next-Gen EVs