Volkswagen Group's China sales slump drives profit drop despite stable revenue

Volkswagen Group reported first‑half revenue of €1,581.02 billion, virtually unchanged year‑on‑year, but after‑tax profit fell 30.7% to €3.103 billion. The profit decline reflects an 8.4% drop in total vehicle sales to 399.7 k units, driven mainly by a 38.6 k‑unit fall in its Chinese joint‑venture deliveries. When the Chinese JV is excluded, overall sales were up about 1%.

The Chinese JV’s contribution to profit shrank sharply, with operating profit falling from €5.06 billion to €1.84 billion. Revenue from the JV is accounted for under the equity‑method and does not flow into the consolidated top line, explaining why revenue remained stable while sales fell. Financial services offset part of the automotive loss, with its revenue rising 7.9% to €33.961 billion, though its profit margin slipped to 5.5%.

Cash flow improved markedly, with automotive net cash flow turning positive to €31.66 billion for the half‑year. Cost reductions included a €15 billion cut in R&D and capital spending, and a target to lower the overall investment rate to around 9% by 2030. Software unit CARIAD posted a 44% revenue increase to €8.15 billion but still recorded an operating loss. The group plans to launch new electric models such as the ID. ERA 9X, aiming for higher profitability in the second half of the year.