Volkswagen:Quarterly Results/2025 Q1

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Q1 2025 Volkswagen Earnings Call Summary

See: Q1 2025 Volkswagen Earnings Call | Q1 2025 Earnings Call Transcript

Q1 2025 results

Special effects recognized in Q1 amounted to 1.1 billion euros: €0.6 billion for the CO2 regulation, €0.4 billion for restructuring costs at CARIAD and Audi and €150 million for the diesel issue and €150 million related to goods in transit which were affected by the US tariff.
Excluding the special effects, Q1 operating margin could have been 5.1% instead of 3.7% reported.
Excluding the CO2 provision and diesel issue provision, brand group core's operating margin could have been 4.6%.
CARIAD booked restructuring in the magnitude of €0.2 billion. Excluding this, operating profit could have been stable. CARIAD revenue continue to benefit from sales volume on the 1.1 and 1.2 software stack.
Traton operating profit, which declined by 38% to €0.6 billion, was impacted by lower fixed cost absorption.
Financial Service division rose 19% to €1.1 billion, aided by normalization in used car prices and positive remarketing results of the used car business.

2025 guidance and future outlook

Arno said in the coming months, they expect additional tailwinds from numerous new models.
Arno said the margins for BEV are still significantly lower than that of ICEs.
2025 guidance will benefit from continued tailwinds from model launches and benefits from continued execution of performance programs.
Increasing BEV share and ramp up costs of new models will burden earnings in 2025 but at a slower pace than in Q1. "But if you do the math, last year, we also had an increase on BEV share quarter-to-quarter. So let's call it the distance in the first quarter was about 10 percentage points. And we had to compensate on the cost side for 10 percentage points in the first quarter. And this basically difference between the target BEV share we need to achieve. And versus last year, that narrows quarter-over-quarter. So the burden is there, but the burden narrows quarter-over-quarter," Antlitz said.
Arno said they are confidence in their 2025 revenue guidance due to strong order intake and bank. They achieved 1,000,000 order bank in Western Europe and April would likely see a higher order intake. He said the order intake spans into Q3 (min 16:30).
Arno said they expect the performance programs to continue compensating for the dilutive margin effect of BEVs (min 1:13:36)-Q&A.
Audi is still calculating the workforce restructuring measures but even taking it into account, the still expect to be in the guidance range in Q2.
Arno said they are really focus on cash and strong liquidity base in light of the challenging environment (Q&A).
Arno pointed out that the ID.2 all will reach margin parity since it will use Lithium cells and a new technology (integrated technology) which is cost effective in today's perspective (Q&A).
Arno pointed out that they regard the upper end of their 0.5 billion to 1 billion euros guidance for proportionate operating profit in China to be realistic.

China

Volkswagen joint venture in China will launch " highly competitive Level 2+ and Level 2++ ADAS solutions in 2025 and 2026, respectively."
Arno pointed out that he was very pleased with the performance on tech, product and technology that the China team has presented. "They are really delivering and they are delivering fast," he said (min 15:10).
Arno said their colleagues in China are delivering. Time to market is down 30%. Material costs have been reduced 40% with the ambition to bring it down by another 10% in 2026.
Arno said the ADAS that is being developed with Horizon robotics drives really great.
Arno said they are on a very good track to achieve the proportionate operating profit target of 2 billion euros in China in 2027.
Arno pointed out that it's too early to project the proportionate operating profit for 2026.

US Tariffs

Arno said the full impact of the tariff cannot be comprehensively assessed at this time.
Arno said about 200,000 vehicles are produced in the U.S, about 290,000 from Mexico and around 240,000 from Europe (Q&A).
Arno pointed out that they are thinking of localizing further some production in the US.
Arno said they can comprehend analysts estimate for the tariff impact ranging from 2 to 4 billion euros but said that's not their estimate (Q&A).
Arno said their engines build in the Mexico plant are not compliant with the USMCA (Q&A).
Tariffs pre-buy momentum was not significant for the Volkswagen Group in Q1 (Q&A).

CO2 regulation

Arno said if the current regulatory regime (no change in regulation to meet the target in three years instead of 2025) continues, the 600 million euros provisioned for the CO2 regulation in Q1 would be enough for the full year. He pointed that he is a little bit cautious on the number since the subject is basically volatile. If there will be a change in the regulatory regime, the target could be slightly lower (Q&A) (min 1:17:04).

Product offensive and market share

Arno said the largest product offensive in the company's history continue into Q1 with the launch of products such as Audi A6 and Skoda LROC.
Arno said their new models such as the ID.7, ID.7 Tourer, Skoda LROC, Cupra Teramar, A6 E-tron and Porsche 911 are well received.Arno said they are looking at adding hybrid versions for the Atlas, Tiguan and Tyron sold in the US (Q&A).
Rolf said they significantly gain BEV market share in the first quarter.

Cost-reduction programs

Arno said the cost reduction programs agreed last year is delivering results as evidence by reduced headcount in Q1. Headcount in Q1 reduced by around 2,000 compared to Q4. Since 2023, headcount has reduced by 7,000.

Rivian tecnology

Rolf said all the Western vehicles of the Volkswagen Group would be based on the technology that they are developing with Rivian (Q&A).

Debt

Arno said Volkswagen Group renewed its revolving credit facility, increasing it to 12.5 billion euros from 10 billion euros.

Q1 2025 Porsche Earnings Call Summary

See: Q1 2025 Porsche Webcast Call |

Deliveries

CFO Jochen Brechner said the demand for the new 911 is very satisfying, even above expectations, especially for the GTS.
Jochen added that the demand for the electric Macan remains robust.
Jochen said based on their product portfolio and the current market situation, they will not see 300,000 units this year.

Pricing

Jochen said average price for their vehicles rose to €121,000 compared to €115,000 last year.
Jochen said that Porsche being a luxury brand will always focus on value over volume strategy. That is, if demand is falling, they will not cut prices but reduce supply instead.
Jochen expect prices to increase further and help compensate the decline in volumes.

Supply chain issues

Jochen said it's expected that the supply chain situation will remain challenging and that additional supply chain costs must be expected (min 11:14).
Jochen said they estimate that the supply chain burden will be three digit million this year and since it's a complex issue and more electric cars are to come, they also expect additional burden next year (min 44:31).

China

Jochen said they have launched models in the Chinese market that are more attractive than the current ones, which should address the market situation.
Jochen said they expect deliveries in the Chinese market to be in the forty thousand range, down from 56,000 last year (min 17:45).
Jochen said it's clear that they won't see China deliveries achieving the levels they achieved in the past.
Jochen said in the medium term, if the situation doesn't change completely, sales in China won't be more than the levels they expect this year or last year in that range.
Jochen said Taycan is under pressure in China while sales of the electric Macan in the country are not coming in as expected. He said they have introduced passion additions in the Cayenne that should boost sales. He pointed out that the demand for the 911 in China is healthy.

Tariffs

Jochen said they have decided not to increase prices of their vehicles in US for the time being as they await the outcome of trade negotiations. As a result, they have decided to book a special effect.
Jochen said they are still taking orders in the US and that they can still change prices for those orders if the tariff situation doesn't improve.
The tariff headwind for April and May was €300 million. However, Jochen said the full headwind can't be €2.1 billion (€300 million multiplied by 7 months) since they will pass on some of the tariff costs to customers. He added that the math will depend on the seasonality of the model mix. He said if tariffs stay the same, numbers of cars stay the same, pricing stays the same, and everything else stays the same, the you could do the math in that way (min 47:50).
Jochen said as for now, they have no plans to localize production in the US.
Jochen said they don't expect volume meltdown in the US as they have seen in China if tariffs stay in place.
Jochen said they currently see a normal demand pattern in the US. "We see a robust and stable situation in the United States and no special effects based on the tariff," he said (min 59:55).

Midterm and long-term margin targets

Jochen said they still expect operating margin of 15% to 17% over the midterm.