VW boosts Q1 revenue as U.S., Europe offset China slide

Volkswagen Group reported increased first-quarter revenue after strong demand in the U.S. and Europe helped to offset a slide in sales in China.

Revenue rose 22 percent to 76 billion euros ($84 billion) in the quarter, VW Group said in a statement on Thursday.

Operating profit fell to 5.7 billion euros from 8.3 billion after last year’s first-quarter profit was boosted by commodity hedging. Last year’s result was inflated by a surge in value of the company’s nickel hedges. Excluding the valuation effect from commodity hedging, operating profit rose by 35 percent to 7.1 billion euros, yielding a margin of 9.3 percent.

Cariad, the carmaker’s beleaguered software unit, posted a loss of 400 million euros.

Group vehicle deliveries in the first quarter increased 7.5 percent to 2.04 million. Deliveries of battery-electric cars were 141,000, representing a share of around 7 percent of total deliveries.

In China, VW’s biggest market, sales fell by 15 percent and CFO Arno Antlitz said that the carmaker had work to do to catch up with domestic competitors on battery-electric vehicles. “Competition will intensify with more chips and more availability,” Antlitz said on a media call.

Asked how VW would respond to the wave of EV price cuts, Antlitz said: “Our focus is on quality of the business, rather than on volume. This is specifically true for EVs… we don’t want to lose our margin parity target out of sight.”