VW Group Exceeds 2 Mil. Unit Sales for First Time in Q1; Company Raises Stake in MAN

The Volkswagen (VW) Group posted sales of more than 2 million units for the first time in a first quarter with sales of 2.16 million units during the period, with a 9.6% year-on-year (y/y) rise in volumes in comparison to the same point last year, when it sold 1.96 million units. According to a company press release, VW also reported record sales for March with sales rising 12.5% y/y to 862,700 units. This figure was a record number of sales volumes for the group for an individual sales month. However, the company's board member for sales and marketing Christian Klingler was mindful of the drag on sales development that could potentially occur in Europe. He said, "The Volkswagen Group developed very well in the first quarter. We produced another strong performance in North America, China and Russia. However, uncertainty continues, particularly on the markets in Western Europe."

Despite macroeconomic issues in the European market, the Group still managed to generate positive overall growth in the region during the first quarter, with sales rising by 3.2% y/y to 937,000 units. However, Western Europe did post a decline in sales volumes, with a 4.7% y/y fall during the period to 531,900 units. In contrast, sales in Eastern and Central Europe posted accelerated growth of 35.1% y/y to 147,400 units. Sales in the company's Asia-Pacific division rose by 16.8% y/y to 726,100 units, of which 633,900 units were sold in China—this in itself was a 15.6% y/y increase. In India, the firm's sales rose by 21.6% y/y to 34,100 units. Sales in the North America also continue to develop well since the launch of the new facility in Chattanooga last year. First-quarter sales in North America increased by 24.5% y/y to 179,100 units, of which 124,400 units were sold in the US, a 34% rise on last year's total.

On a brand-by-brand basis, the main VW passenger car brand performed very well. Sales during the three months ending 31 March ended at 1.36 million units, an increase of 10.5% year-on-year (y/y). This was helped by a record number of deliveries in March itself, hitting 536,600 units, an increase of 14.6% y/y. VW said that this was the first time it had delivered more than 500,000 units to customers in a single month. Audi also posted a new record high sales total in the US and China in the first quarter, with sales rising 10.8% y/y to 346,100 units, according to a company press release. This overall figure was boosted in addition by a record individual sales month during March, with sales rising by 14.1% y/y to 143,500 units. Sales will continue to be bolstered as the year goes on by the launch of the latest version of the company's new C-segment A3.

Skoda has posted record first-quarter and monthly sales figures in March as the Group's entry-level brand continues to go from strength to strength. According to a press release, Skoda's first-quarter sales rose by 11.8% y/y to 242,700 units, which helped the company achieve a rise in global market share to 1.5% for the period, up y/y from 1.4%. This figure was also supported by a monthly sales record in March, which saw Skoda post a 12.1% y/y increase in sales to 95,200 units. However, SEAT remains the weak link in VW's brand portfolio in the first quarter. The company delivered 80,100 units during the period, which was a 11.6% y/y decline. VW Commercial Vehicles has enjoyed its best-ever first-quarter sales performance with sales rising by 7.9% y/y to 130,700 units, according to a company press release. Its best-selling model during the period was the T5, which saw volumes rise 6% to 39,800 units. The Crafter witnessed a large uplift in deliveries of 40.2% to 11,500 units, while the Amarok pick-up witnessed its sales rise 36% y/y to 18,900 units.

In addition, the VW Group has increased its stake in the MAN Group to 73% in order to exert more influence at board level over the engineering and truck manufacturing business. The stake increase is primarily aimed at accelerating the collaboration between MAN and Scania's truck businesses, according to a company press release. VW raised its holding of ordinary shares in Munich-based MAN to 73%, giving VW control of 71.08% of total share capital. VW previously held 55.9% of voting rights and 53.71% of share capital.

Outlook and Implications

The VW Group has continued its very positive sales development in the first quarter of the year with a record result for the first quarter and an incredibly impressive combined sales total for an individual month in March. The company continues to benefit from its market leading position in China, where it was the first foreign OEM to enter the market. This far-sightedness continues to be a major advantage as its first mover advantage and strong relationship with the Chinese authorities consolidates this market leading position. But the VW Group has also been very active in recent years in investing in other fast-developing emerging economies, with a strong emphasis on Brazil, Russia, India and China. This is now starting to pay off with strong sales gains being reported in Russia and India in particular, although the overall volumes in question continue to lag behind China. However, it means that the VW Group will be in a strong position to benefit from the ongoing development potential of these markets. The company is also enjoying strong growth in the US, where it has been under represented in recent years, despite the strong levels of brand recognition that VW enjoys in the market. A 24.5% y/y increase in the first quarter comfortably outperformed the overall market and the Group is also placing emphasis on growing Audi's presence in the profitable US premium market in an effort to close the gap to BMW and Mercedes-Benz.