Volkswagen AG (VOW3) Earnings Call Transcript & Summary

So hello, and welcome back. We would now like to start the Q&A session for media. I'm really happy to host this session for the first time, at least in my new role. Many of you have already had the chance to talk. We have -- I think we have met in person at the Annual Media Conference in Berlin or at other occasions. I'm very much looking forward working with you. With that, let's start. Arno, floor is yours.

[Operator Instructions] And the first one in line is Jan Schwartz from Thomson Reuters.

Yes. Can you hear me?

Perfect.

Good. Astonishing. Yes. I would like to come back to the outlook, trying to -- not to annoy, but I know you spoke in your press release, announced in the call about promising start into 2023. But I mean the market seems to be -- seems to have -- clearly expected you to rise the forecast slightly. Why did you not? What makes you so cautious? And second point, perhaps, if you could be more precise on the second half of the year, not only on pricing but also on volume. That was my quick questions.

Jan, thanks very much for your question. I think I've said it before, look, when we released our outlook, a lot of people said about, you're bullish, and this is a challenging tough outlook, and are you sure? And we were very confident that we will achieve our financial outlook back then. And now we got really a very good first quarter, which gives us even more confidence. The question on the second half of the year, there will be clearly positive on volume. Look, we guided for basically plus 15% on deliveries. We stand at plus 7.5% today. So we expect even higher catch-up in the next month. If you remember back then, this terrible war broke out in Ukraine in February and March, and that significantly hindered us in the deliveries of cars specifically in Europe because we haven't got all these wiring harnesses we need for the production. So we had rather low April and May. And versus this low April, May, we expect an even more positive -- we stand on an order book of 1.8 million cars. We have strong order entry, great feedback. At the end of the year, we get even greater BEVs from Porsche and Audi. So these are the ingredients for our outlook, strong first quarter. And we expect also a strong second quarter. And with more competition in the second half of the year, I also said we are not naive. We prepare for a stronger competition. We work on productivity. Brand Volkswagen works on an efficiency program. So these are the ingredients for the rest of the year.

Okay. Thank you. Next in line, it is, yes, [ Christian Miskin ] from [ FSS ].

Can you hear me? Hello? Can you hear me?

Yes, we can hear you.

Okay. Thank you. Two more questions on China. First, you will -- you want to grow the sales there this year, but in the first quarter, the sales even went down. They fell 25% in the first quarter. Can you say why that was? And when I got you right in the analyst call, you said that March was -- sales were better. But anyway, minus 25% in the fourth -- first quarter. And can you still land above 200,000 BEVs in China in the whole year? And the second thing is, can you say something about the chip supply and the ongoing development in the chip market? So what do you expect this year?

Yes. We -- overall that we had -- we saw a slow start concerning China. The overall market was down and also our volume was down. When you look at the deliveries that we were more than 20% plus in Europe, more than 20% plus in U.S. and minus 15% in China. And this was true both for the overall market and for us. And we expect both the overall market and our deliveries to recover. We saw a strong March already. March in China was plus 12%. We expect a very strong April, to be honest, versus a weaker April 2022. But we expect both the overall market and our own deliveries to recover significantly throughout the year. Same we expect for the BEVs, although there, we started, I think, with 20,000 BEVs in the first quarter. And we see already better deliveries in April on the BEV side and new cars kicking in, ID.7, I mentioned. And based on that, we are confident that we can be significantly above previous year. I mentioned 200,000. But I also mentioned that we focus on the margin of our business and rather on the volume side. So this is my view on China. In the supply, this is also, I think, a very important question. Look, for at least 2 years, we were very much restricted on the supply side specifically wiring harness. But for a longer period, chips, chips rode its -- a whole undersupply of chips in the industry. And that undersupply improved now month-by-month, quarter-by-quarter. We were still restricted in the first quarter of 2023, but it will improve throughout the year. From our perspective, from my perspective, Q3 2023 will be the time when demand and supply will be more in balance. And this is why I always said we have to prepare for higher competition from Q3 onwards. It will be more difficult to pass on inflationary effects, to pass on higher raw material prices when competition increases. And this is also why we prepare on the cost side with productivity, with an efficiency program in Brand Volkswagen in order to make sure that we can keep our margin strength and even improve it further.

Okay. Thank you, Arno. And thank you, Jan and Christian, for the questions. As there are no more questions in line, this would be the last opportunity if you want to ask questions. Otherwise, this brings us to the end of the joint media analyst and investors call. I'm looking forward meeting you in person at our Annual General Meeting next week in Berlin on May 10 where we may continue our discussions over currywurst, vegan or traditional, of course. So that's fresh for me. We still have 2 questions. So I'm taking it back. So next in line is Victoria. Please, Victoria.

Yes. It's actually not Victoria. It's Chris Steitz from Reuters as well. I used her dialing credentials, so full disclosure at this point. I have 2 questions. Arno, one would be to spell out your battery plan for Europe. So Eastern Europe is next in line. What can you share? How are discussions with government subsidies going? And where are you in the process? And then just basically, are you planning any price cuts to electric vehicles in the near term? Those would be my 2 questions.