VW cuts global delivery forecast after sales fall in China

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German carmaker Volkswagen has cut its global delivery forecast for the year as sales drop in China, its biggest market.

Despite overall strong sales in the first half of the year, the world’s second-largest carmaker has been forced to lower its delivery ambitions because of weakness in the Chinese market.

VW’s chief financial officer Arno Antlitz said a 1 per cent drop in Chinese car deliveries in the first half of the year had forced the group to lower its global delivery target for 2023.

“We have a mixed picture on deliveries in the first half of the year,” he said, stressing the revision was based on China as growth in Europe and North America had been strong.

The new forecast of about 9mn deliveries in 2023 compared with its original aim of about 9.5mn comes a day after its announcement of a $700mn investment and 5 per cent stake in Chinese electric car group Xpeng, a move aimed at boosting market share in the battery segment.

Analysts at Deutsche Bank said the investment suggested the German company “has partially admitted defeat with regard to its current EV products” in China, relying on its relationship with Xpeng to revive sales.

VW chief executive Oliver Blume, aware of the need to raise the company’s game in China, also said on Thursday that VW’s next capital markets day would be held in Beijing next April and focus on the company’s strategy in the country after a poll of analysts and investors showed its biggest market to be a key concern.

The sprawling German group, which other than its eponymous VW brand includes companies such as Porsche and Audi, was one of the first western companies to enter the Chinese market in the late 1970s and has established itself as one of the country’s market leaders.

Its market share in the country for combustion engine vehicles is 19 per cent, according to Deutsche Bank. However, it has struggled to gain share in the electric market — the equivalent figure for the rapidly growing battery vehicle segment is only 4 per cent.

Blume, who has tried to restructure the group since taking over last year, said the company had to “fulfil the expectations of our Chinese customers”.

The “initial stage” of the German carmaker’s relationship with Xpeng will focus on jointly developing two VW-branded electric vehicles, one of which is planned to hit Chinese roads in 2026.

VW’s investment in Xpeng also comes with an “observer” role for the German group on the Chinese company’s board.

Separately on Thursday, VW’s French rival Renault announced that higher prices, new car models, and the fruits of a cost-cutting programme had pushed its profits to record levels in the first half of the year.

Mercedes-Benz, which has moved to a strategy of selling more premium cars, on Wednesday raised its full-year guidance.