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Volkswagen expects slower sales growth as economic outlook dims

Published 2024-03-01, 11:10 a/m
Updated 2024-03-01, 11:17 a/m
© Reuters. FILE PHOTO: Volkswagen's factory is seen in Sao Bernardo do Campo, Sao Paulo state, Brazil June 28, 2023. REUTERS/Leonardo Benassatto/File Photo/File Photo

By Christoph Steitz and Christina Amann

FRANKFURT/BERLIN (Reuters) - Volkswagen (ETR:VOWG_p) forecast on Friday that sales growth would slow in 2024, joining competitors in warning of a weaker economic outlook, rising competition and higher costs.

Europe's top carmaker, whose brands include Audi, VW and Lamborghini, expects sales to grow by up to 5% in 2024, after a 15.5% increase last year to 322.3 billion euros ($349 billion).

That growth suggests 2024 sales of up to 338 billion euros, higher than the 316 billion analyst estimate compiled by LSEG.

Volkswagen's Chief Financial Officer Arno Antlitz sees a "muted economic outlook and intense competition" in 2024, although the carmaker remains confident for the year as a whole, pointing to new product launches.

The comments chime with rivals, including Mercedes-Benz and Stellantis (NYSE:STLA), which both struck a similar tone in results last month.

European carmakers have come under pressure from U.S. rival Tesla (NASDAQ:TSLA) as well as Chinese competitors at a time when global momentum for electric vehicles is fading in the face of waning sales growth and declining government backing.

Volkswagen's shares turned negative and fell as much as 7.1% to their lowest level in more than four weeks after its annual results, which included a drop in the operating margin to 7.0% in 2023 from 7.9% the previous year.

They were down 4.6% at 1606 GMT, while shares in Porsche (ETR:P911_p), which is majority-owned by Volkswagen, also reversed gains and were flat.

Volkswagen said it expects an operating margin of 7.0% to 7.5% in 2024 and proposed to increase the dividend for both its common and preferred shares by 0.30 euros to 9.00 euros and 9.06 euros apiece, respectively.

© Reuters. FILE PHOTO: Volkswagen's factory is seen in Sao Bernardo do Campo, Sao Paulo state, Brazil June 28, 2023. REUTERS/Leonardo Benassatto/File Photo/File Photo

The automaker said its investment ratio is forecast to peak in 2024 at 13.5%-14.5%, driven by spending in its key market China, and would gradually fall in subsequent years to around 11% by 2027.

($1 = 0.9249 euros)

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