VW cuts delivery forecast amid uncertain economic outlook

Following disappointing Q2 earnings, Volkswagen Group has adjusted its 2023 delivery forecasts downwards due to economic volatility and increasing competitive pressure in China. The company will now be focusing on enhancing net cash flow for the remaining part of the year.

Instead of the initially projected 9.5 million units, VW Group is now anticipating full-year deliveries to range between 9 million and 9.5 million vehicles. In response to lower deliveries, the company aims to offset these with higher pricing and improved efficiency in production.

VW reported that the supply of crucial components, such as semiconductors, has improved, but logistical and transportation delays impacted the first half of the year. Despite these setbacks, the company predicts shorter wait times for the latter half of the year and reports a steady demand, with order books filled to 1.65 million vehicles.

Q2's adjusted operating profit was 5.6 billion euros ($6.2 billion), which fell short of analyst estimates. Net cash flow dropped to 226 million euros and the net cash position saw a 72% slump over the June quarter.

CFO Arno Antlitz stated that the priority for the latter half of the year will be on reinforcing net cash flow. He expressed optimism that cost-cutting initiatives across the carmaker's brands would assist in improving the current situation.

Despite the downward revision, the automaker maintains its aim to achieve a full-year net cash flow of between 6 billion and 8 billion euros ($6.66 billion-$8.88 billion).

In the first half of the year, core brands including Volkswagen Passenger Cars, VW Commercial Vehicles, Seat, Skoda, and Cupra managed an operating margin of 5.5%. Meanwhile, brands like Audi, Lamborghini, Bentley, and Ducati achieved a 10% operating margin.

Efficiency-improvement programs, known as performance programs, are being undertaken by all the group's brands, with Volkswagen Passenger Cars alone committing to 10 billion euros ($11.09 billion) in efficiency gains by 2026. The company stated that the effects of these initiatives should start becoming evident in the second half of the year.