Volkswagen AG sales in China fell 15 per cent in the third quarter as the biggest carmaker in Germany continued to lose ground in key markets with the
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Volkswagen AG’s China sales slid 15 per cent in the third quarter as Germany’s biggest carmaker continued to lose ground in key markets in the shift to electric vehicles.
Intensifying competition and weaker spending in China dragged VW’s luxury sports-car brand Porsche AG to its lowest third-quarter sales in a decade. The decline was particularly sharp for Porsche’s electric Taycan model, which sank 47 per cent globally.
VW also saw slumping demand for EVs in Europe, where deliveries of battery-powered cars fell 12 per cent, and in the US, where they tumbled by more than 40 per cent. The removal of state subsidies in Germany and other EU countries has cut into purchases of EVs, which still tend to cost more than their combustion-engine equivalents.
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Weakness in China, though, is taking the heaviest toll on Germany’s auto industry, prompting profit warnings from Mercedes-Benz Group AG and BMW AG. VW, which long dominated sales of gasoline-powered cars there, has fallen behind local manufacturers like BYD Co. that have seized the upper hand with innovative and affordable plug-in models.
“The competitive situation in China is particularly intense, which is the main reason for the global decline in our deliveries,” said Marco Schubert, who oversees sales for VW.
Volkswagen shares fell as much as 1.6 per cent on Friday, pushing the stock’s decline this year to more than 17 per cent. Shares in Porsche traded as much as two per cent higher, with the stock price down roughly 12 per cent since the start of the year.
BMW and Mercedes this week recorded steep declines in China. Sales of BMWs and Mini cars — also made by the Bavarian company — recorded their biggest drop in more than four years, falling 30 per cent in the third quarter in China. Mercedes deliveries there declined 13 per cent amid weak demand for pricey models like the S-Class and Maybach.
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VW’s struggles in China are contributing to a broader reckoning in Germany, where the company’s namesake marquee is undergoing a massive restructruing. VW said it can no longer shoulder the costs of excess production capacity and high wages in its home market, leading it to end three decades of job security agreements and threaten to close German factories for the first time in its 87-year history.
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China’s slowdown has also left Porsche reassessing its strategy. In the face of the rapid shift to EVs and an economic slowdown, Chief Executive Officer Oliver Blume began pushing Porsche’s China-bound volumes to other markets this year. He’s also said the brand would walk back its electrification target: EVs could account for more than 80 per cent of Porsche’s new-vehicle sales in 2030, but it’s no longer the company’s concrete goal.
Despite the headwinds, VW did see some growth in EV sales in China. Deliveries there of battery-powered vehicles across its brands were up 5.2 per cent in the third quarter and 26.5 per cent this year.
VW is one of the European carmakers at risk of retaliatory duties from Beijing after European Union member states voted to impose tariffs on electric vehicles from China.
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First Published Date: 12 Oct 2024, 09:38 AM IST
