Volkswagen, falling profits and stop night shifts. Bmw, electrics good

Like many other industry players, Vw is struggling with weaker-than-expected demand for electric vehicles, as well as supply chain challenges and rising costs, even as European and US regulators try to keep cheap Chinese electric vehicles out of their markets with tariffs.

Volkswagen, too, has decided to extend the life of its combustion engine line-up, potentially adding new models among its brands but without increasing total investment spending. Focusing on costs, Antlitz said that investment spending for the 2025-2029 period will be reduced to around EUR 165 billion from EUR 180 billion in the 2024-2028 period. 'It's about costs, costs and costs,' Blume remarked. Volkswagen is in the midst of a EUR 10 billion savings campaign announced in December, with cuts of up to EUR 4 billion planned for 2024. The impact of some measures, such as the early retirement incentive, will take time to take effect, Antlitz explained.

Looking at the half year as a whole, revenue grew slightly to EUR 158.8 billion against EUR 156.3 billion a year earlier. Operating profit was lower than in the same period of 2023 (10.1 billion versus 11.3 billion, with an operating margin of 6.3% versus 7.3% in 2023). A decline, according to the company, 'related to several non-operating factors, in particular unplanned provisions for Volkswagen's redundancy programme; the operating margin was further impacted by higher fixed costs, charges related to the deconsolidation of Vw Bank Russia and the closure of part of Man Energy Solutions' gas turbine business'.

Sales reached 4.3 million (-2.4%) but Wolfsburg confirms an estimate of +5% by the end of 2024, with an operating margin of between 6.5% and 7%.

Share declined moderately in mid-morning, then slumped 3.39%. Ordinary shares down 11% since start of year.

"The Volkswagen Group," commented CEO Oliver Blume, "achieved a solid performance in the first half of the year. In a difficult environment, 2024 marks the Group's biggest product offensive and a complete restructuring of our business areas. The results reflect successful teamwork across all brands. Strategically, we have set a decisive course and the Top 10 programmes are making good progress. We are accelerating our global software strategy with international partners (the latest major investment is in the American Rivian, ed.) and have completely realigned our structure in China. Performance programmes are accelerating across the Group and our new products are receiving positive feedback from global markets. This is a good basis. However, much work still lies ahead of us.

The CEO of Volkswagen said that China and Europe should create tariff systems that reward those who invest in domestic car production, adding that the Chinese ministers he recently met in Beijing are open to negotiations and aim for a fair solution. "When they invest in Europe and cooperate with European countries, that is good and should be taken into account. When we invest in China, we want to benefit from the same treatment'.

Bmw also reports declining profitability. Operating profit down 18.4 per cent to EUR 7.9 billion compared to EUR 9.7 billion a year ago. The Munich-based company thus posted lower-than-expected margins in the second quarter, as increased competition and weaker demand in China weighed on sales. The Ebit margin of the automotive division fell to 8.6% from 10.6% in the same period last year, below the 8.7% expected by analysts. However, Bmw emphasised the consistently high level of investment, with record spending on model renewal and electric vehicles expected to peak this year.

The balance of the half-year was very positive on the side of battery-powered versions. The BMW, Mini and Rolls-Royce brands recorded a 24.6% increase in Bev deliveries, reaching 190,614 fully electric vehicles. The BMW brand ranks third worldwide, with almost 180,000 Bevs delivered. In total, the company delivered 1,213,276 vehicles to customers of all Bmw Group brands between January and June, reaching the same level as the previous year.

Concorrenza in aumento, sguardo al futuro

Ebit sotto le attese per Bmw

Un concept Bmw, i Vision Dee, esposto ad Auto China 2024

The company confirmed its forecast for 2024, reporting a slight decrease in the group's pre-tax profits due to higher costs related to research and development, production and personnel. Bmw's automotive segment margin in the second quarter was at the lower end of the 8-10% target set by the company for the full year.

"In the challenging conditions of the first half of the year, we are leading in our direct competitive environment with our electric growth and, at the same time, have delivered high profitability within the full-year target corridor for ten consecutive quarters," said CEO Oliver Zipse. "With this high degree of resilience, we can consistently invest in our future while the entire industry navigates rough waters. In this way we remain clearly in line with our biggest future project, the Neue Klasse, with which we will take BMW to a completely new technological level starting next year."

Currently, the biggest problem for BMW is in China, where local carmakers are gaining share with low-cost electric vehicles, forcing European rivals to cut prices. The Munich-based manufacturer recorded a 4% drop in sales in China in the first six months of the year, but performed better than Volkswagen and Mercedes.

Title down 3%, -17.4% since the beginning of the year.