Volkswagen reports decline in global deliveries amid weak EV demand
Volkswagen struggles with declining EV sales and fierce competition in China
Volkswagen AG reported a decline in global vehicle deliveries in 2024, primarily due to weak demand for electric vehicles (EVs) and fierce competition in key markets, particularly China.
The German carmaker, which owns a portfolio of brands including Audi, Skoda, and Porsche, delivered 9.03 million vehicles globally, marking a 2.3% decrease compared to the previous year. Sales of fully electric vehicles saw significant declines in both Europe and the United States, highlighting the challenges Volkswagen faces in transitioning to an electric future, reports Bloomberg.
The sharpest downturn was observed in China, the world's largest auto market, where Volkswagen’s deliveries fell 9.5% to 2.93 million vehicles. This drop in sales was exacerbated by intensifying competition from local manufacturers, particularly BYD Co., which has made significant strides in the EV sector.
At the same time, Volkswagen faced declining demand for its electric models in Europe, where reductions in government subsidies further dampened sales. This is part of a broader struggle within the European automotive industry, as manufacturers like Mercedes-Benz and BMW have also encountered hurdles in meeting EV sales targets.
Internal Struggles and Cost-Cutting Measures
CEO Oliver Blume has been under pressure to implement cost-saving measures to turn the company’s fortunes around, but his efforts have been complicated by resistance from labor unions, particularly at Volkswagen’s core brand.
Negotiations to reduce production capacity have been ongoing for months, leading to labor unrest in certain plants. Despite these efforts, Volkswagen has struggled to push through these changes, which has hindered the company’s ability to reduce costs effectively.
Looking Ahead: New Partnerships and Strategic Goals
In response to these challenges, Volkswagen is seeking new partnerships to bolster its position in the global market. Blume has set his sights on collaborations with China’s Xpeng Inc. and US-based Rivian Automotive Inc., hoping these alliances will boost innovation and provide a competitive edge.
However, the outlook for 2024 remains uncertain, as global economic uncertainty persists, particularly in China, and potential US tariffs threaten further pressure on Volkswagen's operations.
Additionally, Hyundai Motor Group has unveiled plans to increase its domestic investment by 19% this year, aiming to reach a record 24.3 trillion won ($16.65 billion).
