Volkswagen sales drop 8.6% in Q2 as automaker plans major model overhaul

Volkswagen plans to halve its model range as second-quarter sales fell 8.6 per cent, with a sharp decline in China weighing on the German automaker's performance

Volkswagen (VW) reported weak sales on Friday, a day after the German automaker announced plans to cut its model range by nearly half as sales declined sharply, particularly in China.

 

The Wolfsburg-based company said group sales fell 8.6 per cent year-on-year in the second quarter to just under 2.1 million vehicles, with sales in China plunging by more than one-third.

 

Following a board meeting on Thursday, Volkswagen said its "fundamental realignment" over the past three years had entered the next phase, announcing plans to streamline its model range by up to half, without providing further details.

 

Chief Executive Officer Oliver Blume outlined plans to make Volkswagen faster and more competitive by reducing complexity, focusing on key technologies, improving alignment across regional markets and cutting excess capacity, citing an "increasingly demanding environment".

   

The core Volkswagen brand delivered slightly more than 1 million vehicles in the second quarter, down 14 per cent from a year earlier. Deliveries at Audi declined 8 per cent, while Porsche deliveries fell 18 per cent.

 

Lamborghini, Skoda and the group's trucks business reported higher sales, while deliveries increased in Europe and the Americas.

 

In December, Volkswagen reaffirmed its commitment to China, where electric vehicles have gained market share amid intense competition.

 

Research firm Bernstein, in a note following Thursday's announcement, expressed scepticism. “VW stated that it is extending its technology leadership, a claim that will likely raise eyebrows given the pace of innovation among its Chinese competitors,” it said.

 

Separately, the Qatar Investment Authority (QIA) has vetoed plans for a collaboration between Volkswagen AG and Israeli defence company Rafael Advanced Defense Systems that was intended to preserve hundreds of jobs, according to people familiar with the matter.

 

The QIA owns more than 10 per cent of Volkswagen's shares and 17 per cent of its voting rights. The proposed joint venture would have involved converting a Volkswagen plant to manufacture military vehicles for a missile defence system.