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Brand Group Core Achieves 21% Profit Increase In Q1 2024 Despite Market Hurdles
In a robust display of financial health, the Brand Group Core, encompassing Volkswagen Passenger Cars, Škoda, SEAT/CUPRA, and Volkswagen Commercial Vehicles, has unveiled its first-quarter results for 2024. The group announced a notable 21% surge in operating profit, reaching 2.1 billion euros. Despite a slight dip in sales revenue to 32.8 billion euros compared to the previous year, these figures underscore the group's adept management and strategic cross-brand synergies.
Thomas Schäfer, a key figure on the Board of Management of Volkswagen AG and CEO of the Volkswagen Passenger Cars Brand, highlighted the group's resilience amidst challenging market conditions. Schäfer pointed out the collective efforts in cost reduction and enhanced collaboration across brands as pivotal to their current success. He underscored 2024 as a pivotal year for implementation, with a focus on delivering advanced technology at competitive prices.
The financial landscape for the Brand Group Core in this quarter was influenced by external factors such as the cessation of government incentives for electric vehicles in Germany. This situation was further compounded by significant depreciation charges linked to new product campaigns and investments in electric mobility.
Despite these challenges, key financial indicators remained strong. Vehicle sales nearly matched the previous year's figures at 1,191,926 units. The slight decrease in sales revenue did not deter a 21% increase in operating profit before special items to 2.1 billion euros, with an improved operating return of 6.4%. Cash outflows were primarily attributed to preparations for upcoming model launches.
The quarter also saw a commendable performance in vehicle deliveries, totaling 1,543,500 units. All-electric models such as the ID.4, ID.3, Škoda Enyaq, and ID. Buzz were significant contributors to this achievement. Notably, Škoda and Volkswagen Commercial Vehicles experienced substantial growth in electric vehicle deliveries compared to the previous year.
Each brand within the Brand Group Core reported positive outcomes. Volkswagen Passenger Cars maintained a stable overall position with a 26.8% increase in operating profit before special items. Škoda Auto saw a slight uptick in operating return, while SEAT/CUPRA kicked off the year on a strong note with increased vehicle sales and operating profit. Volkswagen Commercial Vehicles also witnessed positive business development with significant growth in both vehicle sales and operating profit.
Looking forward, the Brand Group Core is set on enhancing its financial robustness, innovation capabilities, and overall resilience. Plans are underway to streamline operations, reduce development cycles, and further exploit synergy potentials across brands. With these strategies in place, the group is confidently progressing towards its target of achieving an 8% operating return by 2026.
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