Bumpy road ahead for Volkswagen as it loses top spot in Chinese market

A global economic slowdown is expected to weigh on new car sales for the world's largest automaker, Volkswagen. 

Announcing its 2023 financial results, the German firm's finance chief Arno Antlitz said the "general economic situation remains challenging." He added: "We are confident about 2024, despite the muted economic outlook and intense competition."

Antlitz's view was shared by CEO Oliver Blume, who said that "in 2023, we established a solid foundation." Blume added, "we are aware of our current challenges and are tackling them rigorously in order to leverage the enormous potential of the Volkswagen Group."

The group, which aside from the core VW brand also includes Audi, Skoda and Seat, reported an operating profit of 22.6 billion euros ($24.73 billion). Its operating profit reached 25.8 billion euros ($28.24 billion) when adjusted for valuation effects, in particular from future sales through hedging.

Globally, VW announced 9.4 million vehicle sales in 2023 - an increase of 10 percent compared to the previous year.

"The Volkswagen Group is entering the long-distance race of transformation from a position of strength," insisted Blume. 

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The Wolfsburg-based company said its battery and electric vehicle (BEV) sales continue to grow. In 2023, the BEV share of sales reached 8.3 percent - a new record. In absolute figures, Volkswagen Group delivered 771,100 battery electric vehicles last year, an increase of 35 percent from 2022.

The group also announced it is moving its carbon neutrality targets forward, as it works to achieve balance sheet carbon neutrality at all production sites worldwide by 2040 - 10 years earlier than planned. 

The company says it's working to reduce 90 percent of all greenhouse gas emissions from 2018 and to make 100 per cent of external electricity supply at all locations, including China, come from CO2-neutral sources.

Increased competition

In China, Volkswagen says it faces increased competition from domestic brands like BYD, which is offering heavy discounts to boost market share. In 2023, BYD overtook Volkswagen as the best-selling car brand in China - ending the German brand's 15-year spell as market leader. In 2023, BYD reported 2.4 million new car registrations versus Volkswagen 2.3 million.

To try and recover the loss of customers, Volkswagen is promising to bring 30 new product launches to market.

According to finance chief Antlitz: "To ensure that we remain successful sustainably, we will focus in 2024 on ramping up new vehicles, reducing costs, making greater use of synergies within the Group, and establishing more robust regional positioning also by continuing to grow profitably in North America."

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