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Despite Lower Sales, Volkswagen’s Profit Dropped By 20% In The First Quarter

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Volkswagen
A man polishes a Volkswagen ID GTI Concept car on display at the International Motor Show (IAA) in Munich, southern Germany, on Sept. 5, 2023. Christof Stache | Afp | Getty Images

(CTN News) – Volkswagen on Tuesday announced that its operating profit in the first quarter dropped by 20% due to weaker demand for its premium brands, which resulted in lower sales for the company.

This year’s operating profit came in at 4.6 billion euros ($4.9 billion), which is a substantial increase from last year’s figure of 4.6 billion euros ($4.9 billion). In the same period in 2023, operations profit was 5.7 billion euros, which is about a 50% increase from the previous year.

There were several factors responsible for the decline in profits, and Volkswagen cited lower sales, higher fixed costs and an “unfavorable mix of country, brand and model” as being most important.

According to the company, 2.1 million units of vehicles were sold in the first quarter, a decrease of 2% over the same period last year.

As expected, Volkswagen Group’s results for its first quarter indicate that the start of the year is going poorly, said CFO and COO of Volkswagen Group Arno Antlitz in a statement.

There was a decline in operating profit at Porsche, the luxury brand of the automaker, as compared with the first quarter of 2023, when the company posted 1.7 billion euros in operating profit. It was reported by the company that the unit has sold 71,000 vehicles in the first quarter of the year, a drop of 16% as compared to the 85,000 vehicles sold in the same period last year.

According to Volkswagen, the lower volumes were a result of product development as well as delays associated with customs procedures.

According to Volkswagen, it is still on track to reach its financial targets of 2024 with a 5% rise in sales revenue and an operating margin of 7% to 7.5% for the full year.

In addition to the launch of over 30 new models across all brands during the course of the year, we are expecting additional momentum over the course of the year. Furthermore, Antlitz noted that, as the year progresses, the effects of our efficiency programs will gradually be felt as we progress through the year.

At 9:00 a.m. Friday, the shares of Volkswagen were down 2.6% on the European stock exchange, according to the time in London.

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Salman Ahmad is a seasoned writer for CTN News, bringing a wealth of experience and expertise to the platform. With a knack for concise yet impactful storytelling, he crafts articles that captivate readers and provide valuable insights. Ahmad's writing style strikes a balance between casual and professional, making complex topics accessible without compromising depth.

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