By ZHOU Shuqi
Volkswagen Group's deliveries in China in Q1 decreased 14.5 percent year on year, and Volkswagen brand sales have been surpassed by BYD. However, the group's global sales revenue still increased by 22 percent year on year to 76.2 billion euros (580 billion yuan, US$84 billion).
According to Volkswagen’s Q1 report, revenue growth benefited from the recovery of sales in Europe and North America, with overall deliveries increasing by 7.5 percent.
EV deliveries increased by 42 percent to 141,000, 7 percent of all deliveries. However, increased market share does not necessarily bring an increase in profitability. The group's operating profit fell by over 30 percent to 5.7 billion euros in the first three months, lower than 8.3 billion euros in the same period last year.
CFO and COO, Arno Antlitz, said the group hopes to achieve its 2023 financial goals of a 10 percent to 15 percent increase in annual revenue and a business sales return rate of 7.5 percent to 8.5 percent. Key to achieving this goal is its largest single market, China.
In Q1 of this year, Volkswagen delivered 21,500 EVs in China, a year on year decrease of 25.4 percent, one of the worst performances among all EV players. In comparison, BYD delivered a quarter of a million vehicles.
Last year, more than half of Volkswagen's sales came from China. Volkswagen may have realized that its past successful joint venture model is no longer sustainable in the rapidly iterating EV market. Speed is crucial in China, where there are almost new energy vehicles launched every week.
The group is to invest 1 billion euros in an EV R&D center in Hefei. with over 2,000 employees. The center will cover whole-vehicle development and procurement, aiming to collaborate with local high-tech companies.
Localizing decision making
Volkswagen is also said to be planning to launch a new EV sub-brand in China, based on the Cupra, to compete with rivals such as BYD. The SUV Cupra Tavascan was originally to be produced at the Hefei plant and exported to Europe, but is now aimed at Chinese consumers.
The group is making significant efforts to move decision-making ing from Wolfsburg to Hefei. This includes Volkswagen’s software company in China, CARIAD China, having full authority over software development.
