So a fairly strong quarter in the first quarter here, beat on sales and beat on
margins, put a bit of more detail on what this sort of quarter looked like in
the context for VW. Good morning Oliver.
Thank you for having me here. Now, we had indeed a very encouraging
start into the year 2023 with both revenues and our underlying operative
margin significantly up. Our revenues was up more than 20
percent. Our underlying margin, which is the
margin before the effects from our commodity hedges stand at nine point
three percent. This business well above our margin
corridor. We sold 140,000 EVs.
We have an order bank still of one point eight million cars in Europe alone.
So customer demand is still strong. And you remember when we released our
targets for 2023, quite some people thought we were quite ambitious.
But based on this promising start in the first quarter and based on the order
bank of fourteen point eight million cars in Europe, we are quite confident
that we can fully achieve our our financial outlook.
And now we're talking about the outlook. I'd like it, if you could, to rank for
me. The US, Europe and China and kind of
what do you think would be the biggest drivers of growth and what in each of
those markets will drive that growth? I know Europe, for example, we have a
lot of backlogs. Just want to get your perspective on
that. Now, look, with our very strong growth
both in Europe and in the US. In China, we had the slowest start, both in terms of
industry and in terms of our own sales. But we expect specifically in Europe and
in China and in Europe and in the U.S., demand will be strong.
Our deliveries will be strong. And this will be a significant push also
for the second half of the year. In Europe, I said it already, we have an
auto backlog of one point eight million cars.
This will carry us well into the year 2023.
But in terms of orders in Europe, I know there's a lot of backlog.
I know we spoke to Mercedes last week. They were saying that, yes, we have this
huge backlog, but actually the orders have slowed down substantially.
What are you seeing for orders in Europe?
It's actually quite different at Volkswagen.
Look, we had quite some deliveries. The deliveries brought up seven and a
half percent. The deliveries were up more than 20
percent in Europe. And still we sit on an auto bank of one
point eight million cars. So the order intake was rather strong
specifically on the ICE cars. It was a little bit weaker on the EV
side. But this has also something to do with
the effect that we saw at the end of last
year when state subsidies were running out.
So there were a lot of preorders last year.
But also on the EV side. We expect orders to pick up on the
remainder of the year. Specifically,
also, with new cars hitting the showrooms. I'm standing here in front of an ID7.
It's a great car. It will hit the showroom in the second
half of the year. It's a lot of technology, a range of 700
kilometers. So we're quite confident that we can
achieve our targets also on the delivery side.
And in terms of pricing and really held up, it seems, in the first quarter.
Have we reached peak pricing, do you think, for cars?
Do you think that that is going to come down?
We think we have a rather strong position in the current pricing
environment. First and foremost, we have strong and
fascinating brands. We have Porche,
we have Audi, Lamborghini, Bentley. Even Volkswagen.
And I said before we sit on a huge order bank, specifically on the ICE cars, but
also on the EVs cars in Europe, fascinating cars hitting the showroom in
the second half of the year. And last but not least, we have a clear
strategy that that our first focus is margin and marginal quality rather
than volume and market share. So based on that, we are not worried
about our pricing discipline. And so obviously with Tesla aggressively
cutting prices. So you're not, that's not something that
you would see yourselves doing in order that you don't need to wage a price war
with Tesla, if I'm hearing you correctly.
Well, as I just mentioned, first and foremost, we have a very strong position
in terms of orders and in terms of product substance and second, we have our
strategy and we don't want to lose our target outside the margin priority
in the next two to three years at ICE and EVs.
And for that we need also strong pricing on the BYD.
And then some margins, as you say, you know, have two sides, the pricing, but
also the cost. You think that a way to maintain the
margins would be to look at cost. Is that something you're looking at?
No, thank you for your comment.
But that's exactly what we are doing. I always said that the competition will
increase. Look, we have semiconductors supply
improving with demand is coming to town. Q3, Q4 will see a much intensifies
competition and we are preparing for that accordingly.
On the one side, we have this strong growth substance, but on the other hand,
we are not. Now, if we have to prepare on the cost
side, both in terms of productivity, in terms of fixed cost discipline, we need
a program at Volkswagen to improve margin.
So these are the things we set up right now.
And then something that this quarter was also marked by obviously the launch of
the model behind you. But also your entire board went to
China. What did you leave that visit with?
No, you're right. We have been in China.
Personally, I spent three days in China. We had to look at competition.
We talked to the teams on the ground. We talked to customers.
We talked to our JV partners. And it is clear we have a very strong
position in China. But although we that strong position, we
have to accelerate. We have to accelerate specifically on on
the BYD side. And I would say in three dimensions.
First, in Adas so in driving assistance function in kind for
attainment, but also in general in the overall speed at which we adapt to local
Chinese customer needs. And in all these three areas, we made
significant decisions already. We teamed up with Horizon Robotics.
On the other side, we recruited some Chevy's and some collaborations on
their infotainment. And most importantly, we founded the 100
per cent tick with the midterm 2000.
Developers on the ground in China would develop in China for China to look to
speed up development. And last but not least, we introduced
the ID7. It's a great car.
So we have all these measures we have in place already.
We are quite confident that we can play a leading role in China in the future.
And do you. And are you targeting a certain
proportion of the market in China that you think you can you can achieve?
Obviously, in the first quarter? You know, one of the stories was that
BYD overtook the Volkswagen.
How do you win back that crown? Is it down to that recipe that you have
just you have just given, or is there anything else you can do and sort of
what are you aiming at? What do you think is a is a good is a
good proportion of that market? We are still marketed and ICE cars as
obvious. We had a slow start in EVs in 2023, but
we want to pick up in the remainder of the year.
But for China is true, what we always say for the rest of the world, we focus on
the quality and margin of the business rather than on volume and market share.
And everyone seems to have had a fairly good quarter in the first quarter, but
everyone's a bit hesitant about the sort of outlook. For you in your mind,
is that to do with these sort of more macro conditions of, you know, a global
slowdown, the Fed and all this going on with interest rates?
Or to what degree is it that and to what degree do you think it is specifics
within the auto sector? Like, if you could draw that distinction
between the sort of the macro and what you're looking at in the auto sector?
No, of course, we look into a challenging
environment. We have a discussion on banks and we
have inflation that obviously is give some uncertainty. For the
auto sector, we still believe that the sector will,
the overall industry will will increase by 7 to 8 percent.
This is our current assumption. But yes, there will be increased
competition in the second half of the year.
But as I said based on a good product substance, strong product, substance
based on our strong brands and we preparing on the cost side, we are quite
confident that we can achieve our outlook, financial outlook specifically,
whether in terms of our margin target between seven and a half and
eight and a half percent.