Q1 2025 Volkswagen AG Earnings Call
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Operator: Good morning ladies and gentlemen, and welcome to the Volkswagen AG Investor, Analyst and Media Call of Q1 2025 conference call.
Yusuf: Good morning, ladies and gentlemen, and welcome to the Volkswagen Agate Investor Analyst and media call of Q1, 2025 conference calls I am Yusuf the chorus call operator, I would like to remind you that all participants will be in listen only mode and that this conference is being recorded.
Operator: I am Yousef, the course call operator. I would like to remind you that all participants will be in listen-only mode and that this conference is being recorded.
Operator: After the presentation, a Q&A session will follow. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0.
Yusuf: After the presentation and Q&A session will follow you can register for questions at any time by pressing star one on your telephone for operator assistance. Please press star and Zero. This conference must not be recorded for publication or broadcast at this time, it's my pleasure to hand over to Peter Zaffino head of corporate Communications. Please go ahead.
Operator: This conference must not be recorded for publication or broadcast.
Pietro Zollino: At this time, it is my pleasure to hand over to Pietro Zollino, Head of Corporate Communications. Please go ahead.
Pietro Zollino: Good morning, everyone, and a warm welcome to the first quarter 2025 results call of Volkswagen Group. This is a joint call for both the media and as well as investors and analysts, moderated by Rolf Woller, our Head of Treasury, IR and myself, Pietro Zollino, Head of Corporate Communications. With us today is, as usual, Arno Antlitz, our CFO and COO.
Yusuf: Good morning, everyone in the warm welcome to the first quarter 2025 results call of folks one group.
So John calling for both the media and as well as investors and analysts motivated by a I'll follow head of Treasury.
Peter Cozzolino: And myself, Peter Cozzolino head of corporate communications with US today is as usual until it's our CFO and COO, Mike come Onno you.
Pietro Zollino: Welcome, Arno. You should have received the press release, the interim financial report, and all other related materials, which were published this morning. If you do not have them, you can find all the documents on our group website. In case of any issue, give us a call or drop us an email and we will send them straight to you. The contacts are also on our website.
Speaker Change: You should have received the press release, the interim financial report and all other related materials, which were published this morning. If you do not have them you can find all the documents on our group website.
Speaker Change: Or any issue give us a call or drop us an email and we will send demonstrates to you. The context I'll also on our website.
Rolf Woller: Now let me hand over to Rolf, who will give you a brief run-through of the call. Thank you, Pietro, and very good morning to everyone on the call. I hope the weather on your side is as sunny as it is here today in Wolfsburg. Thanks for joining us today.
Speaker Change: Let me hand over to Ralph who will give you a brief run through of the car.
Ralph: Thank you Pietro and very good morning to everyone on the call I hope the weather on your side is as Sunny yes. It is here today in both book.
Speaker Change: Thanks for joining us today.
Rolf Woller: Let's have a look at the agenda. Arno will first present the key highlights of the first quarter, and after that we will take a closer look at the financial results and the full-year outlook for 2025. Following his presentation, we will host a Q&A session for the investor and analyst community, which is moderated by myself. And after the session, we will have a short break before we continue with the media Q&A, which will then be hosted by Pietro.
Speaker Change: That's how to look at the agenda Arnaud will first present.
Speaker Change: Present, the key highlights of the first quarter and after that we will take a closer look at the financial results and the full year outlook for 2025.
Speaker Change: Following his presentation, we will host a Q&A session for the Investor and analyst community, which is moderated by myself and after this session. We will have a short break before we continue with the media Q&A, which will then be hosted by Ms. At all.
Rolf Woller: Since today's call includes forward-looking statements, as always, the safe harbor language and other cautionary statements on the slide will govern today's presentation.
Speaker Change: Since todays call includes forward looking statements as always to safe Harbor language and other cautionary statements on the slide.
Speaker Change: On today's presentation.
Rolf Woller: Please read it yourself, because I will not read it to you, and with that, I hand it over to Arno. Arno, go ahead, please. Yeah, thank you Rolf.
Speaker Change: Please read it yourself, because I cannot read it to you and with that I'll hand, it over to Arnaud I don't know go ahead. Please.
Arnaud: Yes, I think youre right, ladies and gentlemen.
Arno Antlitz: Ladies and gentlemen, we saw a mixed start to the year 2025. continue to make significant progress in implementing our strategy. Some tangible results could be seen some days ago at the Shanghai Auto Show. We have some encouraging news on the customer side. Sales revenue was up 3%. Order intake in Western Europe grew even by 30%. Our BV share was up 10%, up to 10%. And the BV share in Western Europe more than doubled to 19%. This is evidence that our vehicles are very well received by our customers.
Speaker Change: We saw mixed start to the year 2025.
Speaker Change: We continue to make significant brokers in implementing our strategy. Some tangible results could be seen some days ago at the Shanghai Auto show.
Speaker Change: We have some encouraging news on the customer side sales revenue was up 3% order intake invest in Europe grew by 30%.
Speaker Change: Our BV share was up 10% up to 10% and to be Vitia invest in Europe more than doubled to 19%.
Speaker Change: This is evidence that our vehicles are very well received by our customers.
Arno Antlitz: As expected and as guided, Volkswagen Group got off to a slow start to 2025 in financial terms and on top we had to book some special effects and restructuring expenses. On April 9th, we pre-released some of our KPIs. Therefore, let's dive straight into the presentation with the highlights of the first three months. And let me explain to you why we think our performance in Q1 was still respectable. The largest product renewal in our group's history has continued in Q1 with quite a number of new model launches. This includes exciting new models such as the Audi A6, the Skoda Elrock, and momentum will continue into 2026 with the launch of the Urban BV family.
Speaker Change: But as expected and as guided folks fund group got off to a slow start to 2020 five in financial terms and on top we had to book some special effects and restructuring expenses.
Speaker Change: On April nine Threep released some of our Kpis, therefore, let's dive straight into the presentation with the highlights of the first three months and let me explain to you why we think our performance in Q1 was still respectable.
Speaker Change: The largest product in the New Orleans, our group's history has continued in Q1 with quite a number of new model launches. This include exciting new models, such as the Audi a six quarter, Iraq and momentum will continue into 2026 with the launch of the urban BV.
Speaker Change: Your family.
Arno Antlitz: And even bigger step will be the idea everyone, we have shown a first prototype of the affordable electrified future of Volkswagen, expected to hit the markets in 2027. During last week's Shanghai Auto Show, we've provided a follow-up on our In China, For China strategy. Truly amazing achievements on the product and technology side, but we also did not stand still to optimize costs and our financial setup. Following Volkswagen AG's agreement in late 2024, Audi's management and works council negotiated the future of the brand's German plans, and this is done to make Audi more resilient and more flexible and leaner going forward.
Speaker Change: And even bigger step will be the idea every one we have shown the first prototype of the affordable electrified future of Volkswagen expected to hit the market in 2027.
Speaker Change: During last week's Shanghai Auto show, we've provided a follow up on our in China for China strategy.
Speaker Change: Truly amazing achievements on the product and technology side, but you also did not standstill to optimize costs and our financial setup.
Speaker Change: Going forward swung a cheese agreement in late 'twenty 'twenty, four or is management and Brooks concert negotiated the future of the brands German plants and this is done to make all the more resilient and more flexible than you know going forward.
Arno Antlitz: We have successfully renewed our revolving credit facility with 44 banking partners and increased the amount to 12.5 billion Euro from 10 billion Euro. And last but not least, we've completed the placement of 11 million Triton shares and with that we increased the free float to 12.5%. Our colleagues in China are delivering. Time to market is down 30%, allowing us to develop vehicles in 24 to 33 months. Material costs are reduced by 40%, with the ambition to bring it down even further by another 10% until 2026. And to highlight the highly competitive central solar architecture, CEA, is being locally developed.
Speaker Change: We successfully renewed our revolving credit facility with 44 banking partners and increase the amount to $12 5 billion Euro from 10 billion Euro.
Speaker Change: And last but not least we've completed the placement of 11 million charter shares and with that we increase the free float to 12, 5%.
Speaker Change: Our colleagues in China are delivering time to market is down 30%, allowing us to develop vehicles in 24 to 33 months material costs are reduced by 40% with the ambition to bring it down even further by another 10% until 2026 and to highlight the highly <unk>.
Speaker Change: Relative central solar architecture see a is being locally developed the China electric architecture will enable numbers software features that are tailor made to the wishes of Chinese customers.
Arno Antlitz: The China electric architecture will enable numerous software features that are tailor-made to the wishes of Chinese customers. Our joint venture, Corizon, will launch highly competitive Level 2++ and Level 2++ ADAS solutions in 2025 and 2026, respectively. The execution of our in-China, for-China strategy is fully on track, customer-centric, China-specific, and highly competitive product substance, both in terms of tech and in terms of cost. and with around 30 new models by 2026.
Speaker Change: Our joint venture Ryzen relaunch highly competitive level, two plus and level, two plus plus Adas solutions in 2025 and 2026, respectively.
Speaker Change: And the execution of our in China for China strategy is fully on track with customer centric, China specific and highly competitive product substance.
Speaker Change: In terms of tech and in terms of cost.
Speaker Change: And it's around 30 in your models by 2026.
Arno Antlitz: Back to the first quarter results. Global deliverance in the first three months of 2025 increased to 2.1 million vehicles. This is 1.4 percent above prior year quarter. Incoming orders in Western Europe were strong with an increase of 29% year-on-year and BEV order intake was particularly strong, up by 64% compared to the same period last year. Our models are well-received in the market, and new models across drivetrains and types enjoy great customer demand, such as the ID.7, ID.7 Tourer, Skoda Elrock, Cupra Terramar, Audi A6 e-tron, or the Porsche 911. As a result, order book in Western Europe has been growing to about 1 million vehicles at the end of March, reaching well into the third quarter.
Speaker Change: Back to the first quarter results global deliveries in the first three months of 2025 increased to $2 1 million vehicles. This one 4% above prior year quarter.
Speaker Change: Incoming orders in Western Europe were strong with an increase of 29% year on year and PV order intake was particularly strong up by 64% compared to the same period last year.
Speaker Change: Our models are well received in the market and new models across Drivetrains and types and tried great customer demand such as the 87 seven tour, a scooter Iraq Cobra Terramara, Audi Asics, each run or the Porsche 911.
Speaker Change: As a result.
Speaker Change: Order book invest in Europe has been growing to about 1 million vehicles at the end of March reaching well into the third quarter.
Arno Antlitz: In the coming months, we expect additional tailwind from numerous new models. Deliveries growth in the first quarter was driven by strong performance in Western Europe and North America region, which were both up 4%. Our operations in South America achieved double-digit growth overall, supported by a particularly strong increase in Argentina, where we more than doubled volume. Growth recorded in all three regions has more than compensated for the decline in China. Our BV deliveries saw Boyan growth and reached 217,000 units, corresponding to 10.2% of group deliveries and 59% year-on-year growth. Our BV share in Western Europe grew even stronger and more than doubled year-on-year to about 90% of our sales.
Speaker Change: In the coming months, we expect additional tailwind from numerous newer models.
Speaker Change: Deliveries growth in the first quarter was driven by a strong performance invest in Europe, and North America region, which were both up 4%.
Speaker Change: Our operations in South America achieved double digit growth over all supported by a particularly strong increase in Argentina, where we more than doubled volumes.
Speaker Change: Growth recorded in all three regions has more than compensated for the decline in China.
Speaker Change: Our BV deliveries, so I'll point out growth and reached 217000 Julius corresponding to a 10, 2% of group deliveries and 59% year on year growth.
Speaker Change: Our BV share in Western Europe grew even stronger and more than doubled year on year to about 90% of our sales.
Speaker Change: Yeah.
Arno Antlitz: With that, let's move on to the financials and the operating performance of Volkswagen Group in the first quarter. Vehicle sales came in at 2.1 million units in the first three months, slightly up year-on-year at 1%. Group sales increased by 3%, driven by both automotive and financial services. Operating result came in 37% lower at 2.9 billion Euro corresponding to a margin of 3.7%. Our product offensive continued across all brands, but in particular at Audi and Porsche. The substantial increase in BV sales and their share in the group's volume is evidence of our strong product momentum. On the other hand, the strong increase in BEV share led to the expected margin dilution, since, as of today, margins of the battery electric vehicles are still significantly below those of ICE cars, thus putting pressure on our margins.
Speaker Change: With that let's move on to the financials and the operating performance of <unk> group in the first quarter.
Speaker Change: Regional sales came in at $2 1 million units in the first three months slightly up year on year at 1% group sales increased by 3% driven by both autologous atone automotive and financial services.
Speaker Change: Operating result came in 37% lower at $2 9 billion euro corresponding to a margin of three 7%.
Speaker Change: Our product offensive continued across all brands, but in particular at Audi and Porsche.
Speaker Change: A substantial increase in PV cells and their share in the group's volume is evidence of our strong product momentum.
Speaker Change: On the other hand, the strong increase in BV share led to the expected margin dilution since as of today margins of the battery electric vehicles are still significantly below those of ice costs, thus putting pressure on our margins.
Arno Antlitz: On top of this development, special earnings effects totaled 1.1 billion or 140 basis points in March and in Q1 2025. Around 0.6 billion euros have been booked to provision for potential penalties in connection with the current CO2 regulation in Europe based on the current regime. Around 0.4 billion euro costs were incurred for restructuring measures at Carriot and Another 150 million provisions were booked related to the diesel issue. And effects from the valuation of vehicles in transit in connection with the import duties introduced in the United States at the beginning of April burdened results by 150 million euros.
Speaker Change: On top of this development, especially earnings effects totaled $1 1 billion or 140 basis points in margin in Q1 2025.
Speaker Change: Around 0.6 billion euros have been booked a provision for potential penalties in connection with the currency to regulation in Europe based on the current regime.
Speaker Change: One 4 billion euro costs were incurred for restructuring measures at carriage and Audi.
Speaker Change: Another 150 million provisions were booked related to the diesel issue.
Speaker Change: And effects from the valuation of vehicles in transit in connection with the inputs you just introduced in the United States at the beginning of April.
Speaker Change: <unk> results by 150 million euros.
Arno Antlitz: Excluding the special effects, Q1 2025 operating margin would have amounted to 5.1%, roughly in line with the expected mooted start, but definitely not at a satisfying level. We need and we will continue to reduce fixed costs and expand productivity measures to compensate for the marginal derivative effect of the BV ramp up throughout the remainder of the year. cash flow in automotive division totaled to minus 0.8 billion euro in the first three months about 1.7 billion euro above prior year quarter. Overall a solid cash flow performance in the mooted first quarter which was impacted by about 0.5 billion euro cash out for restructuring initiated in 2024 largely related to the end of production in the Brussels plant.
Speaker Change: Excluding the special effects Q1, 2025 operating margin would have amounted to five 1% roughly in line with the expected Moody's start, but definitely not at a satisfying whatever we.
Speaker Change: We eat and we really continue to reduce fixed costs and expand productivity measures to compensate for the margin dilutive effect of the B b ramp up throughout the remainder of the year.
Speaker Change: Cash flow in the automotive division totaled to minus <unk> 8 billion Euro in the first few months apart $1 7 billion euro above prior year quarter.
Speaker Change: Overall, our solid cash flow performance in the Moody's first quarter, which was impacted by about <unk> 5 billion Euro cash out for restructuring initiatives in 2020 for lottery related to the end of production in the process plant.
Arno Antlitz: The lower operating result was more than compensated for by less working capital outflow, as well as lower investment spent in the quarter. This brings me to the automotive net liquidity, which declined by about €0.2 billion compared to the year-end 2024. Two additional items are worth noting in addition to the net cash flow, M&A expenses of about €700 million, largely related to the acquisition of a stake in Sauber Formula One from Audi and an investment of Porsche in VW. and about 400 million inflow from the placement of Trayton shares.
Speaker Change: The lower operating result was more than compensated for by less working capital outflow as well as lower investment spend in the quarter.
Speaker Change: This brings me to the automotive net liquidity, which declined by about 2 billion euro compared to the year end 'twenty 'twenty four two.
Speaker Change: Two additional items worth noting in addition to the net cash flow M&A expenses of about 700 million.
Speaker Change: Largely related to the acquisition of a stake in Sabra Formula one.
Speaker Change: From Audi and an investment of Porsche and bottom.
Speaker Change: And about 400 million inflow from the placement of trading shares.
Arno Antlitz: Overall, at €33.2 billion, net liquidity continues to stay at a solid level at the end of Q1 2024. Coming to the divisional performance, passenger cars recorded an operating result of €0.6 billion, about 50% low below the prior year period. The margin amounted to 2.8%, down 3.2 percentage points. Commercial vehicles saw a decline of 38% to €0.6 billion. This corresponds to an operating margin of 6.2% below the full year guidance range. The division expects a pick-up, in particular in the second half, and confirmed its full-year target. The financial services division recorded an operating result of 1.1 billion Euro corresponding to an increase of 90% year over year.
Speaker Change: Overall at $33 2 billion Euro net liquidity continues to stay at a solid level at the end of Q1 2025.
Speaker Change: Coming to the divisional performance passenger cars recorded an operating result of <unk> 6 billion euro about 50% below the prior year period.
Speaker Change: The margin amounted to two 8% down three two percentage points.
Speaker Change: Commercial vehicles saw a decline of 38% to 6 billion. This corresponds to an operating margin of six 2% below the full year guidance range.
The division expects a pickup in particular in the second half and confirmed its full year targets.
Speaker Change: The financial services Division recorded an operating result of $1 1 billion corresponding to an increase of 90% year over year.
Arno Antlitz: Let's look to the drivers behind the operating result development in the passenger car segment. Volume price mix contributed to a negative 0.8 billion euro. If the higher volume outside China could not fully compensate for a negative mix and pricing due to the higher sales incentives for BVs. On top, CO2 provisions had a negative impact of around 0.6 billion euro. Fixed costs and other costs increased to a large extent due to restructuring measures. Let us have a more detailed look at the overhead cost development. Group recorded a slight increase of overhead costs in absolute terms. This was due to increases at Porsche and Drayton as well as related to the ramp-up of new business fields.
Let's look to the drivers behind the operating result development in the passenger car segment.
Speaker Change: Volume price mix contributed to a negative <unk> 8 billion euro.
Speaker Change: With the higher volume outside China could not fully compensate for a negative mix in pricing due to the higher sales incentives for bvs on top tier two provisions had a negative impact of around 6 billion Euro.
Speaker Change: Fixed costs and other costs increased to a large extent due to restructuring measures.
Speaker Change: It does have a more detailed look at the overhead cost development.
Speaker Change: Group recorded a slight increase of overhead cost in absolute terms. This was due to increase that portion trading as well as related to the ramp up of new business fields.
Arno Antlitz: On the other hand, we achieved first effects from restructuring measures. The overall cost ratio was stable in the quarter. We've just started accelerating the execution of our efficiency programs across all brand groups and business fields. Rest assured that we continue to drive implementation of the defined measures with full force to improve our position from here in the coming quarters. The measures in implementation related to Tukum Volkswagen, which we agreed in December, play an important role here. Tukum Volkswagen is delivering results as evidenced by the reduced headcount. tariff agreement is implemented. In the first three months of 2025, Volkswagen AG reduced the number of active employees by about 2,000 at its German locations.
Speaker Change: On the other hand, we achieved first effects from restructuring measures.
Speaker Change: The overall cost ratio was stable in the quarter.
Speaker Change: We've just started accelerating the execution of our efficiency programs across all brand groups and business feels rest assured that we continue to drive implementation of the defined measures with full force to improve our position from here in the coming quarters.
Speaker Change: The measures in implementation related to complex fog, which we agreed in December play an important role here to Conflux, one is delivering results as evidenced by the reduced head count.
Speaker Change: Tariff agreement is implemented in the first three months of 2025 Bucks one itchy reduce the number of active employees by about 2000 at its German locations in total since the end of 2023 head count declined by about 7000 as a result of our performance programs and the hiring freeze.
Arno Antlitz: In total, since the end of 2023, headcount declined by about 7,000 as a result of our performance programs and the hiring freeze.
Arno Antlitz: Moving on to the performance of our brand groups, platforms, and financial services business. If the passenger car segment, brand group core, recorded strong sales revenue growth of 8% year-on-year. The operating results, so that 1.1 billion and a margin of 3.2%, 3.2 percentage points below the prior year level. Headwinds were recorded from a significantly higher BV share and special effects related to a CO2 regulation and an increase of allowance for the diesel issue in the magnitude of $150 million. including special effects, the operating margin would have amounted to 4.6%. The product momentum at Audi is paying off.
Speaker Change: Moving on to the performance of our brand groups platforms and financial services business.
Speaker Change: If the passenger car segment bankrupt core recorded strong sales revenue growth of 8%.
Speaker Change: Year on year.
Speaker Change: The operating results stood at $1 1 billion and a margin of three 2%.
Three two percentage points below the prior year level.
Speaker Change: Headwinds were recorded from a significantly higher B V sharing special effects related to our CEO to regulation and an increase of allowance for the diesel issue and the magnitude of $150 million.
Speaker Change: Excluding special effects, the operating margin would have amounted to four 6%.
Speaker Change: The product momentum at Audi is paying off brand grow progressive recorded sales revenue significantly above last year plus of 12% driven by growth in unit sales.
Arno Antlitz: Brand Group Progressive recorded sales revenue significantly above last year with a plus of 12% driven by growth in unit sales. Despite the strong top-line operating result, capped in at €0.5 billion, corresponding to a margin of 3.5%, only 10 basis points above the prior year quarter. Positive effects from volume growth were compensated for by high ramp-up costs related to new model launches, provisions for vehicles in transit, and the strong increase in PV share. The operating margin of Brand Group Luxury came in at 8.7%, the decline was mainly due to lower sales, in particular in China, higher material and R&D costs, as well as expensive for adjustment of the company organization.
Speaker Change: Despite the strong top line operating result came in at <unk> 5 billion euro corresponding to a margin of three 5% only 10% only 10 buses points above the prior year quarter.
Speaker Change: Positive effects from volume growth, but compensated for by higher ramp up costs related to new model launches provisions for vehicles in transit and the strong increase in P V shape.
Operating margin of Branco block III can be met at four 7%. The decline was mainly due to lower sales in particular in China higher material and R&D costs as well as expensive for adjustment of the company organization.
Arno Antlitz: Let me outline some effects at brain group core. SCOTA margin continued to stay strong at 7.5%. and Brand Volkswagen recorded strong product and sales momentum with sales revenue plus 10 percent above prior year. but was burdened by special effects in a magnitude of 350 million. Even after these effects, the brand's margin amounted to just 2%. Both brand Volkswagen and brand commercial vehicles had an encouraging start to the year in terms of fixed cost reduction, but need to speed up implementation of productivity measures in the German plan. It continues to increase license income backed by increased sales volume on the 1.1 and 1.2 software stack.
Speaker Change: Let me outline some effects that Bryan Koop Corp scored a margin continued to stay strong at seven 5%.
Speaker Change: And Brent Fox, one recorded strong product and sales momentum with sales revenue plus 10% above prior year.
Speaker Change: But was burdened by special effects in a magnitude of $350 million.
Speaker Change: Even after these effects branch margin about amounted to just 2%.
Speaker Change: Both brand Farzana brand commercial vehicles had an encouraging start to the year in terms of fixed cost reduction, but need to speed up implementation of productivity measures in the German plants.
Speaker Change: Yeah. It continues to increase license income backed by increased sales volume under 1.1, and 1.2 software stack sales rose accordingly by 33% to around <unk> 2 billion Euro operating results stood at a negative point 8 billion, excluding the mentioned costs related to restructuring measures of point to.
Arno Antlitz: Sales rose accordingly by 33% to around 0.2 billion euro. Operating results stood at a negative 0.8 billion euro, excluding the mentioned cost related to restructuring measures of 0.2 billion euro. Results would have been stable compared to the prior year. Power Corp, ramp-up of Salzgitter plant and the build-up of the organization is continuing, which lead to an operating loss of 0.2 billion Euro in the first quarter, some 100 million Euro higher than in Q1 2024. Trayton saw a slow start to the year, both in terms of volume and financial results. In the first quarter of 2025, Trayton recorded about 10% lower unit sales, which translated into a corresponding decline in sales revenue in the quarter.
Speaker Change: 2 billion Euro results would have been stable compared to the prior year period.
Speaker Change: The powerful ramp up of such good plant and the buildup of the organization is continuing which led to an operating loss of <unk> 2 billion Euro in the first quarter, some 100 million euro higher than in Q1, 'twenty 'twenty four.
Speaker Change: Straighten saw slow start to the year, both in terms of volume and financial results in the first quarter of 2025 threatened recorded about 10% lower unit sales, which translated into a corresponding decline in sales revenue in the quarter.
Arno Antlitz: Mainly due to the resulting lower fixed cost absorption, the company's operating result declined by 38% to €0.6 billion. Our financial services business performed well in the quarter, supported by improved contract volume, especially in Europe. Operating result increased by 90% to 1.1 billion Euro. The used car business benefited from positive free marketing results, while the normalization of used car prices continued in the quarter. credit loss ratio slightly increased to a still solid level of 0.42%. Spenditures on CapEx and R&D in the Automotive Division decreased by around 11% overall to €7.7 billion in the first quarter. This corresponds to an 11.2% of the automotive sales revenue, which is slightly below our forecasted range, mostly due to a reduction in R&D.
Speaker Change: Mainly due to the celgene lower fixed cost absorption the company's operating results declined by 38% to 6 billion Euro.
Speaker Change: Our financial services business performed well in the quarter supported by improved contract volume, especially in Europe.
Speaker Change: <unk> result increased by 90% to $1 1 billion Euro the used car business benefited from positive free marketing results, while the normalization of used car prices continued in the quarter.
Speaker Change: The credit loss ratio slightly increased to a still solid level of 0.42%.
Speaker Change: Expenditures on Capex and R&D in the automotive division decreased by around 11% overall to $7 7 billion Euro in the first quarter. This corresponds to an 11, 2% of the automotive sales revenue, which is slightly below our forecasted range, mostly to a reduction in R&D costs.
Arno Antlitz: Reduced investment spend of $165 billion for the 2025-2029 planning round period is confirmed while we continue our efforts to improve investment efficiency. Moving on to the performance of our China joint ventures in a highly competitive market environment, we continue to balance profitability and market share. Deliveries in China fell by 7% to about 644,000 vehicles. The proportionate operative result of our joint ventures activities in China came in at 272 million Euro in the first quarter of 2025, about a third below prior year period. Based on a solid start to the year, we regard the upper end of our guidance range of 0.5 billion to 1 billion euro in proportion to operating profit as a realistic target.
Speaker Change: Reduced investment spend of 165 billion for the 2025 to 2029 planning around period is confirmed while we continue our efforts to improve investment efficiency.
Speaker Change: Moving on to the performance of our China Joint ventures in a highly competitive market environment, we continued to balance profitability and market share deliveries in China fell by 7% to about 644000 vehicles.
Speaker Change: The proportionate operative result of our joint ventures activities in China came in at 272 million Euro in the first quarter of 2025 about a third below prior year period.
Speaker Change: Based on the solid start to the year with regard to the upper end of our guidance range of <unk> 5 billion to 1 billion Euro in proportionate operating profit as a realistic target.
Speaker Change: Yeah.
Arno Antlitz: This brings me to the financial outlook for 2025 financial year and the key results drivers. Continue to expect a tailwind from our revamped model portfolio in a slightly positive volume trend and the markets outside China. We expect gradually increasing benefits from the execution of our performance programs and restructuring initiatives. The significant expansion of BV volumes, particularly in Europe, as well as the ramp-up cost of numerous new models and related to the new business field, are expected to burden earnings in 2025, but at a slower pace than in the first quarter.
Speaker Change: This brings me to the financial outlook for 2025 financial year and the key recites drivers.
Speaker Change: Continue to expect the tailwind from our revamped mobile portfolio in a slightly positive volume trend and the markets outside China.
Speaker Change: Expect gradually increasing benefits from the execution of our performance programs and restructuring initiatives.
Speaker Change: A significant expansion of PV volumes, particularly in the Europe as well as the ramp up cost of numerous new models and related to the new business field I expected to burden earnings in 2025, but at a slower pace than in the first quarter.
Arno Antlitz: In summary, we confirm the financial outlook for the year 2025. We continue to expect the Volkswagen Group to increase sales revenue by up to 5%. The operating return on sales is expected to be in the range of 5.5% to 6.5%. This outlook is based on the tariff situation as per end of February and thus does not include potential additional effects from the introduction or adjustment of trade tariffs as the effects and their interactions cannot be conclusively assessed at present. The investment ratio in the automotive division is expected to be in the range of 12 to 30%.
Speaker Change: In summary, we confirm our financial outlook for the year.
Speaker Change: 2025, we continue to expect the Fox one group to increase sales revenue by up to 5% operating return on sales is expected to be in the range of five 5% to six 5%.
This outlook is based on the tariff situation as per end of February and desktop not include potential additional effect from the introduction or adjustment of trade tariffs as the effects and their interactions cannot be conclusively assessed at present.
Speaker Change: So the investment ratio in the automotive division is expected to be in the range of 12% to 13%.
Arno Antlitz: Automotive net cash flow should be in the range of 2 to 5 billion Euro. This includes cash out of around 2 billion in connection with the implementation of restructuring measures. And we continue to expect net liquidity to be in the range of... 34 to 37 billion euros. Taking into account the most recent announcement of Porsche AG related to the adjustment of their full year outlook, we currently expect group return on sales, as well as automotive net cash flow and net liquidity to trend towards the lower end of the presented guidance range.
Speaker Change: Automotive net cash flow should be in the range of two to 5 billion Euro. This includes cash out of around $2 billion in connection with the implementation of restructuring measures and we continue to expect net liquidity to be in the range of.
Speaker Change: 34 to 37 billion Euro.
Speaker Change: Taking into account the most recent announcement of Porsche AG related to the testament of their full year outlook.
Speaker Change: Currently expect group return on sales as well as automotive net cash flow aetna liquidity to trend towards the lower end of the presented guidance ranges.
Arno Antlitz: Ladies and gentlemen, our start to the year was mixed. We continue to make significant progress in the implementation of our strategy. For example, in China, as presented last week at the Shanghai Auto Show, our product offensive is starting to paying off, as evidenced by the strong momentum in the auto intake and our top-line performance. On the other hand, we cannot be satisfied with our results in the first quarter and the financial outlook for the full year. An operating margin of around 4% in the first quarter clearly shows that there is a considerable amount of work lying ahead of us.
Speaker Change: Ladies and gentlemen.
Speaker Change: Our start to the year was mixed we continued to make significant progress in the implementation of our strategy for like somebody in China as presented last week at the Shanghai Auto show or product offensive is starting to paying off as evidenced by the strong momentum in the order intake in our topline performance.
Speaker Change: On the other hand, we cannot be satisfied with our sites in the first quarter and the financial outlook for the full year and operating margin of around 4% in the first quarter clearly shows that there is a considerable amount of work lying ahead of us.
Arno Antlitz: Given the current volatile global political situation, it's even more important to focus on the levers within our control. This means driving our strategic initiatives with full force and complementing our great product range with a competitive cost base so we can ensure to succeed also in a rapidly changing global market environment.
Speaker Change: Given the current volatile global political situations, it's even more important to focus on the levers within our control. This means driving our strategic initiatives with full force and complementing our great product range with a competitive cost base. So we can ensure to succeed also in a rapidly changing global.
Market environment.
Rolf Woller: With that, I hand back to Rolf. Thank you very much, Arno.
Speaker Change: With that I.
Speaker Change: I hand back to Ross.
Ross: Thank you very much Arnaud and we're now starting the Q&A session.
Rolf Woller: And we are now starting the Q&A session. I'll give you a little bit of time. In order to register a question, you have to press star 1. If you want to retrieve your question, you have to press star 2. So we see the Q&A rolling up.
Ross: Give you a little bit of time in order to register a question you have to press Star. One if you want to repeat your question you have to press star two.
Speaker Change: So we see the Q&A rolling up and the first question comes from Wholesales amended from J P. Morgan Jose. Please go ahead.
Jose Asumendi: And the first question comes from Jose Asumendi from JPMorgan.
Jose Asumendi: Jose, please go ahead. Good morning, it's Jose from JP Morgan. Thank you all. Thank you, Arno, for all the comments. I guess the first question, please, on tariffs, and obviously they're the most recent announcements by the administration. I'd love to hear a little bit your take with regards to the latest announcements and what can Volkswagen do in the U.S. to improve the level of localization of vehicles or components, and whether you're thinking about what could be the potential impact of the tariffs in your financial status. That would be the first one.
Ross: Good morning, Jose from JP Morgan.
Speaker Change: Thank you all I think I don't know all the comments I guess the first question. Please on on tariffs and obviously the most recent announcements by the <unk>.
Speaker Change: The administration are located to hear a little bit you take.
Speaker Change: What's the latest announcements and and what Paul.
Speaker Change: All I can do it.
Speaker Change: In the U S to improve the level of localization of vehicles or components.
Speaker Change: And.
Speaker Change: What are you thinking about what could be the potential impact of the tariffs in your financial guidance that'll be the first one.
Arno Antlitz: And second, Arno, I'd love to hear a bit more about also, you know, China, we saw the update, you provided also in the past weeks, and the product launches, maybe more on a positive note, I'd like to hear, you know, which product launches you think are going to be more meaningful in 2026? And how do you think this will impact the P&L of your operations in the region? Thank you. Yeah, Jose, first on the tariff side, on a quantitative side, as I said before, since the full impact of the tariffs going forward could not comprehensively be assessed by us, we guide before tariffs, because it's highly difficult to give a concrete projection for the full year.
Speaker Change: As I said I don't know I love to hear anymore about also China.
Speaker Change: We saw the update you provided also and in the past weeks.
Speaker Change: The product launches may anymore on a positive note I'd like to hear you know, which product launches you're seeing are going to be more meaningful in 2026, and how do you think this will impact the P&L of your operations in the region. Thank you.
Speaker Change: Okay.
Speaker Change: Yeah, what I said.
Speaker Change: The first one on the tariff side on the quantitative side as I said before.
Since the full impact of the.
Speaker Change: Tariffs going forward could not comprehensively be assessed by us be re guide before tariffs.
Speaker Change: Because it's it's really difficult to give a concrete.
Speaker Change: Protection on for the for the full year.
Arno Antlitz: On the side, what we can do, I mean, what I can say, we have already a strong presence in the U.S. We are localized in Chattanooga. We run a factory there. We have a huge operation in the U.S. We have a lot of dealers. We are ramping up Scout. And we are strong in North America. And obviously, we look on various scenarios to localize more group models, too early to say. And what I can say, we stand ready to work with policymakers to find solutions to support the U.S. industry while preserving our opportunities and opportunities for workers.
Speaker Change: On the side, what we can do.
Speaker Change: I mean.
Speaker Change: But what I can say, we have already a strong presence in the U S.
Speaker Change: We localized in Chattanooga.
Speaker Change: We run a factory there.
Speaker Change: We have a huge operation in the U S. A.
Speaker Change: There's a lot of dealers, we are ramping up scout.
Speaker Change: And we are strong in North America, and obviously, we look on various scenarios to localized small group models too early to say.
And what I can say, we stand ready to work with policymakers to find solutions to support this industry, a while preserving our opportunities and opportunities for workers.
Arno Antlitz: This is what I can say where we stand currently. And yeah, rest assured, we work on that topic.
Speaker Change: This is what I cant say, where we stand currently.
And rest assured be back on that topic.
Arno Antlitz: On China, yeah, we are quite excited about the update we were able to give in China because basically what we said, we work on several topics, first on the product offensive, second on technology, and third on cost. And I was very pleased with the performance our team presented in China on all three dimensions. They're really delivering and they're delivering fast and they are not only delivering in time but partly even over exceed the targets both in terms of SOP, number of months or years, how long it takes to develop the cars. I don't know whether your colleagues had the opportunity to drive the ADAS tech, which is currently developed, it's great, great tech, it drives really great.
Speaker Change: On China on China, Yeah, we are quite excited about the update we were able to keep in China.
Speaker Change: Because basically what we said we'd work on several topics first on the product offensive second on technology and third on cost.
Speaker Change: And I was very pleased with the performance our.
Speaker Change: T presented in China on all three dimensions, there really delivering and they're delivering fast and they're not only delivering in time, but partly or even over exceed the targets. Both in terms of us up here.
Speaker Change: A number of months or years, how long it takes to develop the costs.
Speaker Change: I don't know whether your colleagues had the opportunity to drive the other stake which is currently.
Speaker Change: This correction.
Speaker Change: It's great great Staggard drives really great.
Arno Antlitz: We've made good progress on the work on cost down. Our target was 40%, including obviously battery, where we moved from LFP, from NMT to LFP. The team also achieved the 40%. And all of that should really lead to the situation that we achieve our targets in what we communicated in 2027 with the two billion net operating proportion of operative result. So having said that, you asked obviously for 2026.
Speaker Change: Good progress on.
Speaker Change: Vocal and crosstown, all we're talking about 40%, including obviously battery.
Speaker Change: You move from left here from unlimited to LSP.
Speaker Change: The cheap the team also achieved a 40%.
Speaker Change: And all of that should really lead to the to the situation that we achieve our targets and what we communicated in 2027.
With the 2 billion.
Speaker Change: Net operating.
Speaker Change: Propulsion operators reside so having said that you asked obviously for 2026, let me jump back to 2025.
Arno Antlitz: Let me jump back to 2025. The second good message is we currently expect to be more on the upper end of the guidance range, between 500 and a billion, which you could see we had a good quarter, 272. So a good compromise between pricing and volume. And in 2026, basically the most important models from Volkswagen kick in, the Evo, the Auro and the Era, three great models, one on the shopping platform, one of China main platform and SUV developed together with SAIC. Audi is bringing some very interesting models. So they kick only in 2026. So it's too early to give you a concrete guidance for the 2026 operative proportion, operative result.
Speaker Change: Second quick messages, we currently expect to be more on the upper end of the guidance range between 501 billion with which you could see we had a good quarter 272, so a good compromise between pricing and volume and in 2026.
Speaker Change: Basically the most important models from from Volkswagen kicking the April the Aro and the era three great models, one on the chopping platform one of China main platform in an SUV.
Speaker Change: It's developed together besides what is bringing some very interesting models.
Speaker Change: They kick.
Speaker Change: In 2026, so it's too early to give you a concrete guidance.
Speaker Change: For the 20th 26 operative.
Speaker Change: A proportion of this result, but rest assured with the kicking in of these models and knowing the current P&L of these models and we are on a very good <unk>.
Arno Antlitz: But rest assured with the kicking in of these models and knowing the current P&L of these models, we are on a very good track to achieve the targets for 2027.
Speaker Change: To achieve the targets for 2027.
Arno Antlitz: Thank you, Arno.
Carol: Hi, Carol.
Horst Schneider: And we continue with Horst Schneider from Bank of America. Horst, please go ahead. Yeah, yeah, thank you and good morning everyone. The first question that I have, of course, that relates to tariff. And I understand that you cannot comment that much on that because negotiations are running. But coming back to this interview that also Oliver Blume gave in the manager magazine, he was saying that Volkswagen is negotiating directly with the US. I know you can't comment on that, but is it possible that we see basically a firm based exemption on the tariffs? And any comment on that would be helpful.
Speaker Change: Thanks, Jose and we continue with Horst Schneider from Bank of America Horse. Please go ahead.
Horst Schneider: Yeah, Yeah, Thank you and good morning, everyone.
Horst Schneider: The first question that I have of course that relates to the tariff and I understand that you cannot comment that much on that because negotiations are running but [noise] coming.
Speaker Change: Coming back to this interview was it also a labor blown up.
Horst Schneider: <unk> in the manager magazine, he was saying that folks on it.
Speaker Change: Of course, you're getting directly with the U S and I know you can't comment on that but is it possible.
Horst Schneider: See basically affirmed based extension on the tariffs.
Horst Schneider: And any comment on desktop be helpful. And then of course I I know also you do not want to quantify tariff right now, but a positive for April and May.
Horst Schneider: And then, of course, I know also you do not want to quantify tariffs right now, but Porsche did that for April and May. So maybe you can just give some hint what is the potential impact.
Horst Schneider: So maybe you can just give some hint what is the potential impact.
Horst Schneider: On the other.
Horst Schneider: The other question that I had that relates to volumes. S&P lowered recently substantially the Volkswagen volume outlook. I know they're always wrong. I think they use Volkswagen as a center of cushion to the rest of the market. So therefore, I do not pay too much attention to that. But they say Volkswagen sales globally, I think something like minus five, minus six percent. You still guide for this five percent revenue growth. There's a China element also included, of course, in this unit sales number of S&P. But can you explain again why you remain optimistic on volume growth and particularly in which region?
Horst Schneider: The other question that I had that relates to our volumes and S&P lowered recently substantially the folks on the volume outlook. I know there are always wrong I think they use volkswagen's percent of Cushing to the rest of the market. So therefore, I do not pay too much attention to that.
Horst Schneider: Folks I can say it globally I think.
Horst Schneider: Minus five minus 6% you still guide for the.
Horst Schneider: 5% revenue growth.
Speaker Change: China element also included of course in the cumulative S&P, but can you explain again why.
Speaker Change: Why you remain optimistic on volume growth, particularly in which region and what do you see in Europe why is Europe for you at the moment increasing in terms of demand. Thank you.
Horst Schneider: And what do you see in Europe? Why is Europe for you at the moment increasing in terms of demand?
Horst Schneider: Yeah, Horst, thank you for the question then. Some of the answers you gave already, rightly commenting that obviously we can't comment on current discussions. That's for obvious reasons. And also in quantifying, look, we really don't want to add to the speculation. But I said before, we are ready to work with policymakers to find solutions that support also the US industry. And this is where we stand today. What I can say, I really don't want to quantify, but as you know, our deliveries to customers in US are about 730,000. About 200,000 of them are produced in the US, including international.
Speaker Change: Yeah.
Speaker Change: Yeah. Thank you for your question then.
Speaker Change: Some of the answers you gave already rightly commenting that obviously, we can't comment on current discussions that's for obvious reasons and also in quantifying look we really don't want to add.
Speaker Change: The speculation, but I said before we are ready to work with policymakers to find solutions that support the industry and business, where we stand today, what I can say I really don't want to quantify it but as you know.
Speaker Change: Our deliveries to customers in U S. At about 730 solid and is about 200000 of them are produced in India S include.
Speaker Change: Including international.
Arno Antlitz: About 290,000 come from Mexico and some 240,000 come from Europe. And I think knowing the magnitude of the tariffs, I mean, everybody could do a little bit of a math. In terms of volume. We stick to our volume outlook, both in terms of deliveries and in terms of sales. In terms of sales, we are even a little bit more confident. Because the delivery outlook in total includes a positive trajectory in Europe, U.S., and also specifically South America, while China, we expect another, I would say, loss of about Transcription by VXA. So, these are really great cars hitting the market in China, but only 2026.
Speaker Change: About 290000 come from Mexico, and some 240000 come from Europe, and I think.
Speaker Change: Knowing that the size of the mechanism of the tariffs have been aired.
Speaker Change: But it could could do a little bit of a mosquito.
Speaker Change:
Speaker Change: In terms of volume.
Speaker Change: Yup.
Speaker Change: We stick to our volume outlook, both in terms of deliveries and.
Speaker Change: And in terms of of of sales and in terms of sales.
Speaker Change: Yeah, even a little bit more confident why because the deliverance outlook in total.
Speaker Change: <unk> includes a positive trajectory in Europe.
Speaker Change: And also specifically South America about China, we expect another I would say loss of about <unk>.
Speaker Change: Percentage point, or even a little bit more and I wouldn't call. It loss, we deliver it.
Speaker Change: Give up another point of share until the great New models it hit the market in China.
Speaker Change: And just to remind you of some of them I'd be able it's on the shopping platform and the.
Speaker Change: The era of us go through cycle or F O b.
Speaker Change: So these are really.
Speaker Change: Great costs.
Speaker Change: Hitting hitting the market in China, but only 2026 and so for 2025 people to be a little bit cautious, but that means in order to achieve our deliveries outlook. We expect a growth in in the areas, which are basically in our books and as you know the Chinese deliveries are not in our books.
Arno Antlitz: And so, for 2025, you want to be a little bit cautious. But that means, in order to achieve our deliveries outlook, we expect a growth in the areas which are basically in our books. And as you know, the Chinese deliveries are not in our books. They're only accounted for at Equity Result. So, we are quite confident that we have a good trajectory there.
Speaker Change: The only accounted for at equity result.
Speaker Change: So we're quite confident that.
Speaker Change: We have a good trajectory there and there are basically two elements first is total market.
Arno Antlitz: And there are obviously two elements. First is total market. Yes, total markets are mooted currently. Specifically, there might be an effect from the tariffs. Who knows? But on the other hand, we have really encouraging auto intake. We gained some share in Europe, even on a high level. Even our BV share now increased our share in the total market. So, cars are very well received. We see a very strong auto intake, and there are more great cars to come. So, basically, what we see in terms of our momentum, we stick to our current outlook of up to 5% sales for the remainder of the year.
Speaker Change: Yes total markets.
Speaker Change: Motive currently specifically that there might be an effect from the tariffs who knows but on the other hand, we have a really encouraging.
Speaker Change: Order intake.
Speaker Change: We gained some share in Europe, even though on a high level B b, even though our BV share now.
Speaker Change: <unk> increased our share in the total market. So costs are very well received.
Speaker Change: We see a very strong order intake.
Speaker Change: And and they are more grid costs to come so basically what we see in terms of our momentum.
Speaker Change: We stick to our current outlook of the up to 5%.
Speaker Change: Sales.
Speaker Change: For the for the remainder of the year.
Arno Antlitz: Arno, just quick follow-up then, what is then your visibility in Europe, given this order book? Is that already something like two quarters or one and a half quarters, what would you say? No, we achieved a million cars. I don't... I'm not sure whether I can say that, but April would even see a little bit higher figures than the million. So the momentum continues in April. And so this reaches well until the Q3 in Europe.
Speaker Change: Yeah, I'll just kick off just take her ups and what is your visibility in Europe. Given this order book is it already something like two quarters or one five quarters.
Speaker Change: It's you have to be achieved a million cars.
Speaker Change: I don't.
Speaker Change: I'm not sure whether I can say that April, but you can see a little bit higher figures than the millions so.
Speaker Change: The momentum continues in April and so this is this richard well until the Q3 in Europe.
Arno Antlitz: Okay, interesting. Thank you.
Speaker Change: Okay interesting. Thank you.
Tim Rokossa: Thank you, Horst, and we continue with Tim Rokossa from Deutsche Bank. Yeah, thank you, Rolf and Arno. I also have two questions, please. The first one is sticking with this auto intake that you just talked about, Arno, obviously quite positive in Western Europe, probably the most positive news, at least I think today, for ICE and BEV. We already know a couple of moving parts for Q2. We know that Porsche takes a really big hit, almost a billion euros in one house. There's maybe some charges at Audi that I was going to ask about for their restructuring processes.
Speaker Change: Thank you Horst and we continue with Tim or cost out from Deutsche Bank.
Speaker Change: Yeah, Thank you Fernando and.
Speaker Change: I also have two questions. Please the first one is sticking with this order intake that you just talked about Arno, obviously quite positive for Western Europe, probably the most positive news at least I think today.
Speaker Change: For Iceland path, we already know a couple of moving parts for Q2, we know that process. It takes a really big hit almost 1 billion euros and one offs, there's maybe some charges that Audi.
Speaker Change: I was going to ask about for their restructuring processes.
Tim Rokossa: How should we think about Q2 with this auto visibility in mind that you have right now? Do you think you can be within the full year guidance range? And then when we think about one of the burdens that he had in Q1, it was clearly coming from the BEV with a very high BEV share now that you already have. How should we think about the headwind from here? Is that getting lower, staying on about the same amount? And I'll try again on the tariffs. I mean, there's all sorts of analyst estimates out there. We all try to do the math.
Speaker Change: How should we think about Q2 with this order visibility in mind that you have right. Now do you think you can be within the full year guidance range.
Speaker Change: And then when we think about one of the thoughts that he had in Q1. It was clearly coming from the P V with a very high Def channel that you already have how shall we think about the headwind from here is that getting lower staying at about the same amount.
Speaker Change: And I'll try again on the tariffs.
Speaker Change: I mean, there's all sorts of analyst estimates out there we all try to do the math, it's multiple billion euros potentially low single digit euro billion at the low end is there anything that you can at least vaguely confirm with respect to the tariff impact on that side.
Tim Rokossa: It's multiple billion euros, potentially low single-digit euro billion at the low end. Is there anything that you can at least vaguely confirm with respect to the tariff?
Speaker Change: Okay.
Speaker Change: Hum.
Tim Rokossa: otter intake, we discussed earlier and Q2, there are several effects, but to start with the new data, even with this transfer rate we expect to be in the Biden's range within Q2 issues. So what are the plus and minus? We also continue to look at the overview of the rates and features, product momentum and sales momentum to continue. We will see and plan for an even higher increase of BEV share, obviously, because you saw the burden of 600 million Q1. From today's perspective, now quarter by quarter, we will increase the BEV share, yes. But if you do the math, last year, we also had an increase on BEV share with a quarter per quarter.
Speaker Change: Order intake as you said.
Speaker Change: I think Beth.
Speaker Change: We discussed in couture.
Speaker Change: There are several effects, but to start with.
Speaker Change: With the conclusion that even if these effects, we expect to be in the guidance range in Q2, So what are the plus and minus.
Speaker Change: We continue to expect.
Speaker Change: Product momentum man.
Speaker Change: Its momentum to continue and we.
Speaker Change: We will see and plan for an even higher increase of BV share obviously.
Speaker Change: Because you saw the the burden of 600 million Q1 from today's perspective now quarter by quarter, we will increase the BV share, yes, but if you do the math and last year. We also had an increase on P V.
Tim Rokossa: So let's call it the distance. In the first quarter, it was about 10 percentage points, and we had to compensate on the cost side for 10 percentage points in the first quarter. And this basically difference between the target BEV share we need to achieve and versus last year, that's narrow quarter over quarter. So the burden is there, but the burden narrows quarter over quarter. And on the other hand, hopefully, you saw also the progress we made on reducing the headcount, 2000 people already left in one quarter. Brand Volkswagen is doing progress in the plans. Just to give you an indication there, they were managed to manage the factory cost down significantly, not to the target.
Speaker Change: Sure Crazy quarter over quarter, so let's call it the distance.
In the first quarter, what was about 10 percentage points and we had to compensate on the cost side for 10 percentage points in the first quarter and this basically the difference between the targets B V shape.
Speaker Change: We need to achieve and versus last year, that's narrows quarter over quarter, so with the the burden.
Speaker Change: Is there, but the burden narrows quarter over quarter and on the other hand.
Speaker Change: Wally you saw also the progress we made on reducing the head count 2000 people already left in one quarter.
Speaker Change: <unk> is doing progress in the plants.
Speaker Change: Just to give you an indication there.
Speaker Change: They will manage to manage the factory cost down significantly not to the target the target was ambitious they they they've made a good progress, but more brokers to come in and they put a lot of pressure on that topic.
Tim Rokossa: The target was ambitious. They made a good progress, but more progress to come. And they put a lot of pressure on that topic. And the wage piece is implemented already. So from For example, brand Volkswagen, you could expect now a decreasing burden from the ramp-up of BV share and an increasing support from our cost measures, and that this should give you an indication of where we want to hit in the end of the year.
Speaker Change: And the wage.
Speaker Change: Piece is in implemented already so from from it.
Speaker Change: For example brand folks along you could expect now are decreasing.
Speaker Change: Burton.
Speaker Change: From the ramp up of BV share in an increasing.
Speaker Change: Support from from our our cost measures and that this should give you an indication of where we're going to hit.
Speaker Change: The end of the year, you rightly mentioned, the one off push them.
Tim Rokossa: You rightly mentioned the one of Porsche communicated yesterday or two days ago, and you rightly mentioned that we could expect some restructuring measures at Audi, they are still calculating the measures, they are still deciding on the measures and negotiating the measures, this is why we could not and had not to book for them for the time being, but both topics taken into account, we expect to be in the guidance range for the the second quarter. Just to confirm, then, this would still be pre-tariffs, right, within the guidance, right? Yeah, obviously. With the tariffs. That's very important.
Speaker Change: Communicated yesterday or two days ago, and you rightly mentioned that we could expect some restructuring measures at Audi. They are still calculating the measures are still deciding on the measures in negotiating the measures. This is why we could not and has not to book for them for the time being but.
Speaker Change: These topics are taking into account we expect to be.
Speaker Change: In the guidance range for the.
Speaker Change: The second quarter.
Speaker Change: Okay.
Speaker Change: Just to confirm that this would still be pre tariffs right within the guidance Rachel Yeah, obviously terrific all around it.
Speaker Change: That's very important.
Tim Rokossa: All the forward-looking statements I make today is obviously pre-tariffs. We are aware that some other automakers, they refuse to do a guidance at all. It's really – currently, we must say the effects we cannot conclusively assess. So, what we decided on, we want to do the math, we want to stick to all of our guidance to be consistent, but all of the forward-looking measures must be pre-tariffs. Today's discussion is pre-territory.
Speaker Change: All the forward looking statements I make today is obviously pre tariffs we are aware that some other automakers they refused to the dog or guidance at all it's really deep currently we must say the effects, we cannot conclusively assessed so what we decided on.
Speaker Change: We want to the malls do you want to stick to all of our guidance.
Speaker Change: So to be consistent but all of the forward looking measures.
Speaker Change:
Speaker Change: A discussion today is pre terrorism.
Tim Rokossa: Thank you. I'm happy to contribute to your best share in Q2. I just got my Audi Q10 Quattro last week. Oh, excellent. Congrats. Thank you.
Speaker Change: I'm happy to contribute to your best check you too I, just got my Audi coupon collateral.
Speaker Change: Excellent congrats.
Speaker Change: Okay.
Speaker Change: Thank you guys.
Tim Rokossa: Thank you, Tim.
Stuart Pearson: We continue with a question we got online. To be fair, it's from Stuart Pearson from Exxon BNP. He was sending me the email on rank three or four, better said, and this is why I read it now to you, Arno.
Speaker Change: Thank you Tim.
Speaker Change: We continue with a question, we got online and to be fair. It's from Stuart Pearson from Exxon BNP and he was with sending me the email on ring three and four better said and this is why I read it now to you Arnaud.
Stuart Pearson: His first question is, could you update us on the competitive environment in China? Given comments regarding reaching the upper end of the guidance range and also noting a slightly better performance from GM in China reported this week too, could we start to see some stabilization in the market pricing dynamic there and how does it differ between the premium and the mass market? And the second question would be, how is the pricing dynamic developing in Europe? Renault, when they released revenue results just a couple of weeks ago, has mentioned the phase of price stabilization. Is that something you're also seeing?
Speaker Change: His first question is could you update us on the competitive environment in China, given comments regarding reaching the upper end of the guidance range and also noting a slightly better performance from G. M. In China reported this week two could we start to see some stabilization in the market pricing dynamic there.
Speaker Change: And how does it differ between the premium and the mass market.
Speaker Change: And the second question would be how is the pricing dynamic developing in Europe Reno when they released him revenue.
Speaker Change: Our results are just a couple of weeks ago has mentioned the pace of price stabilization.
Speaker Change: Is that something you're also seeing and how does the negative 0.3 building pricing and.
Stuart Pearson: And how does the negative $0.3 billion pricing in the first quarter bridge break down between the regions? Just to amend this, I think Renault largely referred with price stabilization to the European market. Yeah, in China, I mean, it Generally, the market stays very competitive and it stays a very competitive environment. pricing environment. And, and this is why we decided to again in 2025, take deliberate actions not to participate to full extent in that, let's not call it price war, let's call it challenging pricing environment. And so this is why we make, yeah, deliberative decisions between pricing and volume.
Speaker Change: In the first quarter bridge breakdown between the regions and just to amend this I think for now largely referred with price stabilization to the European market.
Speaker Change: Yeah.
Speaker Change: Yeah and in China, I mean, it's.
Speaker Change: But generally the market stays very competitive.
Speaker Change: Days are very competitive.
Speaker Change: Pricing environment.
Speaker Change: And this is why we decided to.
Speaker Change: Again in 2025.
Speaker Change: Deliberate actions not to participate to full extent in that that's let's call. It price war, let's call it a challenging pricing environment.
Speaker Change: And so this is why we make yeah deliberate decisions between our pricing and in volume there is some I would call stabilization.
Arno Antlitz: There is some I would call stabilization over the last months, but it's really too early to say. There are also talks about new stimulus. So, what we concentrate on us for the time being, this year we deliberately make a choice to give another percentage points or so, but of the other hand, we want to stay relevant in China. We can't fall too far below. We want to have a good starting position in 2026 when all the new models from Volkswagen are already kicking. I don't want to reiterate all the models. Some of you have been at the auto show at really great models.
Speaker Change: Over the last months.
Speaker Change: But but it's it's really too.
Speaker Change: Too early to say they also talks about new stimulus.
Speaker Change: So but.
Speaker Change: What we concentrate on on us for.
Speaker Change: For the time being this year, we deliberately making a choice to give another percentage point or so.
Speaker Change: But the other hand, we want to stay relevant in China, we cant fall too far below you're going to have a good starting position in 2026, when all the new models from.
Speaker Change: From Volkswagen and Audi kicking I'd only reiterate all the models. Some of you have been at the auto show.
Arno Antlitz: We are really excited about both the customer sections of the models at Volkswagen and Audi with the four rings and Audi. And so we set the ground for re-engaging in this environment in 2026 with a much, much better cost base. This is our way forward. Yeah, pricing, in terms of our bridge, I don't want to bother you too much, but technically, I must give you one example that or one information you know already, we have in the pricing and the mixed bridge, we have the norm, I would say the typical countries, the big regions, the higher inflation countries pricing, for example, Argentina or others, we don't even show in pricing.
Really great products, we're really excited about both the customer acceptance of the models, but folks along at Audi Audi with four rigs and an Audi.
Speaker Change: And so we set the ground for us.
Speaker Change: Re engaging in there.
Speaker Change: This.
Speaker Change: <unk> in 2026 with a much much better cost base that this is our way forward.
Speaker Change: Yeah pricing them in in terms of our approach I I don't want to bother you too much but technically I must give you. One example that ore body.
Speaker Change: Information you know already.
Speaker Change: If you have in the pricing.
Speaker Change: And the mix bridge, we have the normal I would say the typical countries the big the big regions. The higher inflation countries pricing for example, Argentina all others, we don't even show in pricing. So we balanced this pricing be doing China, sorry between Argentina, and the exchange rate others obviously.
Arno Antlitz: So, we balance this pricing we do in China, sorry, we do in Argentina, in exchange rate others. Obviously, the exchange rate hit in Argentina, Brazil, and these countries is much higher. But in this, we basically assess it more in dollar terms. And the pricing we do in this region, it's not in the price volume mix. So, the pricing you see there is basically the big regions, Europe, US. So, pricing is by minus three. This is basically given the current situation and given the situation that the BVs and the BV ramp up is obviously in that line, including the, to be honest, high incentives we currently still give for the BVs.
Speaker Change: The exchange rate hit in Argentina, Brazil in these countries is much higher.
Speaker Change: But in this.
Speaker Change: B B B basically it says it more in dollar terms and the pricing we do in this region its not in the in the in.
Speaker Change: Price volume mix or the pricing you will see there is basically the big regions.
Speaker Change:
Speaker Change: Europe U S and so pricing is by minus three.
Speaker Change: Is this basically given the current situation and given the situation that you had the b visa to be rate PV ramp up is obviously.
Speaker Change: Isn't that.
Speaker Change: Medline, including the.
To be honest high incentives to be currently still give for the bvs.
Patrick Hummel: We are quite pleased because what we originally guided for that volume price mix should be stable. So, we already almost achieved volume price mix stable and giving, taking into account what I said some minutes ago, that the gap between the BV share we had last year and the BV share we are targeting for is narrowing over time. should have even a small chance going out throughout the rest of the year. Very good. Thank you, Stuart, for those questions, and we continue now with the telephone line.
Speaker Change: We are.
Speaker Change: Quite pleased because what we originally guided for that volume price mix with this David and so we're already almost achieved volume price mix stable.
Speaker Change: And giving taking into account what I said to some minutes ago that the gap between the BV share we had last year in the U V shape you are targeting for is narrowing over time.
Speaker Change: The the buckets volume price mix should.
Speaker Change: Should have even a small chance going out at.
Speaker Change: Throughout the rest of the year.
Speaker Change: Very good thanks, just to add for those questions and we continue with the telephone line. The next one would be Patrick Hummel from UBS Patrick. Please go ahead.
Patrick Hummel: The next one would be Patrick Hummel from UPS. Patrick, please go ahead. Thank you, Rolf, and good morning, Arno. My question is a bit more on the on the CapEx and free cash flow side of things. I would assume your conversations with the US administration are about local investments and even, you know, taking the tariff debate aside, I think it's fair to say that Volkswagen Group, amongst the premium OEMs, is least naturally hedged, so to say, in North America with Audi and Porsche brand. If we think high level, you know, are you going to make additional North American investment commitments that could undermine your efforts to, you know, become a more efficient and more cash generative company for the next few years?
Patrick Hummel: Thank you Ralph and good morning, I don't know my question is a bit more on the on the Capex and free cash flow side of things.
Speaker Change: I would assume.
Speaker Change: Your conversations with the U S administration are about local investment than even you know taking the tariff debate aside I think it's fair to say that folks writing a group amongst the premium Oems is least naturally hedged so to say.
Speaker Change: In North America, with Audi and Porsche brand.
Speaker Change:
Speaker Change: If we think high level.
Speaker Change: Or are you going to make additional north American investment commitments that could undermine your your efforts to become a more efficient and more cash generative company for the next few years are there any high level thoughts you can share how are you going to approach this is that.
Arno Antlitz: Are there any high level thoughts you can share how you're going to approach this? Is that, you know, something be it on the powertrain or component side or final vehicle assembly? Is that something that could become a significant headwind to your free cash generation in the next few years? Yeah, Patrick, as always, I have to say it's too early to give you details. What I can say, there are a lot of significant initiatives in the U.S. already factored in in the current figures, obviously, Ramp-Up Scout, the joint venture with Rivian, and Ramp-Up of R&D in a joint venture with Rivian and the stake in Rivian.
Speaker Change: Something be it on the powertrain, our components side or or final vehicle Assembly is that something that could become a significant headwind to your free cash generation in the next few years.
Patrick Hummel: Yeah Patrick.
Patrick Hummel: As always after that it's too early to give you details what I can say there are a lot of.
Patrick Hummel: Significant initiatives in the U S already factored in in the current figures, obviously ramp up Scott.
Patrick Hummel: Did try.
Patrick Hummel: <unk> venture with Arabian and ramp up of R&D in a joint venture with Caribbean undertaking Arabian.
Arno Antlitz: And yes, we are currently evaluating options to localize more in the U.S., this is what I can say. But on the other hand, what we also always said, going forward, year over year, we are basically in a phase that the combustion engine investments, although there are like some more investments in drivetrains, for example, like hybrids or range extenders, the major investments in ICE running out and the double investments run out. For example, look, there are still investments in the Q7 and Q8 combustion engine and equivalent electric cars, but moving a year ahead or two years ahead.
Patrick Hummel: And yes, we are currently evaluating options to localize more in the U S. This is what I can say, but on the other hand, what what we also always said going forward year over year, we are basically interface that there that the combustion engine.
Patrick Hummel: Although there are some more investments in it.
Patrick Hummel: Trains for example, like hybrids or <unk>.
Patrick Hummel: Range extenders.
Patrick Hummel: The major investments in ice.
Patrick Hummel: Running out and the double investments run out for example look there are still investments in nekoosa evident create.
Patrick Hummel: Combustion engine and an equivalent electric cost, but moving a year ahead of two years ahead. So the burden of the peak is basically also behind US and this is how you should should think of our investment.
Arno Antlitz: So the burden or the peak is basically also behind us. And this is how you should think of our investment in R&D CapEx going forward. But obviously, it's too early to say. Currently, we stick to the $165 billion. And let me put it like that. There are to that $165 billion, there are clearly chances in what I just mentioned, and some chances in the other direction, what we could do more in the U.S.
Patrick Hummel: And R&D capex going forward, but obviously, it's too early to say currently we stick to the 165 billion and lets me put it like that they are to that.
Patrick Hummel: 165 billion there are clearly challenges in.
Patrick Hummel: And what I just mentioned.
Patrick Hummel: And some changes in the other direction, what we could do more in the U S.
Arno Antlitz: And Arno, if you allow me that follow up, I know Scout is your baby also, but it feels, you know, from a group perspective, protecting the cash cows of your portfolio should have a higher priority than a new EV-centric brand that comes at a time to the North American market when EVs are maybe not that much in favor of the administration and of the consumer. So is there any flexibility to repurpose the two billionaires spending on Scout, maybe, you know, as also some capacity for the existing brand portfolio? Yeah, Patrick, first and foremost, as Volkswagen Group, we are not driving forward Scout because it's my baby.
Speaker Change: And Arnaud if if you allow me that follow up I know Scott is your baby or so but it feels you know from a group perspective protecting the cash cows of your portfolio.
Speaker Change: Should have a higher priority than a new EV centric brands that comes at a time to the North American market. When Evs are maybe not that much in.
Speaker Change: Favre of of the administration of the consumer. So is is there any flexibility to repurpose. The 2 billion you're spending on Scarlet maybe you know S. S. Also some some capacity for for the existing brand portfolio.
Speaker Change: Yeah.
Patrick Hummel: Patrick first and foremost.
Speaker Change: As folks on group, we are not driving forward Scott because its my baby out that's very important.
Arno Antlitz: That's very important. We are driving Scout forward because it's the really biggest, single, promising segment, automotive segment in the industry. C-Pickup and B-Rugged SUVs in the U.S. is, from a profit pool perspective, really the most attractive segment, and this is why we are driving forward. Second, I would understand completely your question, and I still understand it, but I would understand it if you would stick to 100 percent BEV strategy for Scout. But having a really convincing concept introduced with a range extender, with the engine coming locally from Mexico for 500 miles of range, really positive customer feedback on that topic and basically 80% take rate for the pre-orders moving to that range extender.
Speaker Change: We are driving Scott forward, because it's the really biggest single promising segment automotive segment in the in the industry.
Speaker Change: Pick up and be rugged Suvs in the U S.
Speaker Change: Is from a profit pool perspective really the most attractive segment and this is why we are driving forward second I would understand completely your question and I still understand it but I would understand it.
Speaker Change: If it would stick to a 100%.
Speaker Change: B E V strategy for Scott.
Speaker Change: But having a really convincing concept introduced with a range extender episode with the engine coming locally from Mexico.
Speaker Change: 500 miles of range really.
Speaker Change: Positive customer feedback on that topic and do it basically 80% take rate for the preorders.
Speaker Change: Moving to that range extender Bill.
Arno Antlitz: much more optimistic that we can hit the plant volumes, first. And second, yes, there are also chances to include other activities in the factory in South Carolina. And we also look into that as well. Thank you, Arno. Thank you, Patrick.
Much more optimistic that we can hit the plant volumes first and second yes. They also chances Tau to include other activities and in in the in the factory.
Speaker Change: Uh huh.
Speaker Change: South Carolina, and we also look into that as well.
Speaker Change: Okay. Thank you Arnaud.
Speaker Change: Yeah.
Rolf Woller: Before we continue with Mike, I was reminded by Tim that we have not really answered the question on the tariffs and the impact. And Arno said that, yeah, it's currently too early to make a conclusive judgment. However, I think what we can see and read is obviously the analyst reports with the analysis provided, the 700,000 and the breakdown Mexico imports in the U.S. We can clearly comprehend how most of the analysts come to their conclusions with a potential burden of $2 to $4 billion and just wanted to confirm that that's not our estimate, but this is something we can comprehend.
Speaker Change: Thank you Patrick and before we continue with Mike I was reminded by Tim that we have and.
Speaker Change: Not really answer the question on the on the tariffs and the impact.
Speaker Change: I noticed that it yeah. It's currently too early to make a conclusive judgmental ever I think what we can see and read is obviously the analyst reports and with the numbers provided at the 700000, then to breakdown Mexico imports in the U S. We can clearly comprehend how most of the analysts come to their conclusion.
Speaker Change: With a potential burden off to two 4 billion and just wanted to confirm that that's not our estimate but this is something we can comprehend.
Mike Tyndall: Let's continue now in the line here with Mike Tyndall from HSBC. Mike. Yeah, thank you Mike from HSBC. Appreciate you giving me a chance to ask a couple of questions if I can. Arno, can we talk about BEV profitability? You flag that it's significantly below ice and I'm just wondering what the moving parts are there because it feels like you're being quite aggressive on pricing, which I wonder if that's the bigger headwind because from what we can see from a cost perspective, I would assume the cost position of those vehicles is improving. And then the second one, again, focusing on costs, just the savings that are coming through.
Speaker Change: Continuing now on the line here with Mike Tyndall from HSBC, Mike.
Mike Tyndall: Yeah. Thank you Mike from HSBC I appreciate you, giving me a chance to ask a couple of questions. If I can on it can we talk about Bev profitability you flagged that it's significantly below ice and I'm just wondering what the moving parts are there because it feels like you're being quite aggressive on pricing, which I wonder if that's the biggest headwind.
Mike Tyndall: Because from what we can see from a cost perspective, I would assume the cost position of those vehicles is is improving and then the second one again focusing on costs just the savings that are coming through can you give us a sense of what the.
Mike Tyndall: Can you give us a sense of what the cadence is? Does it accelerate from here considerably? Is there a point where that fixed cost other component in the EBIT walk might actually turn positive? And if so, when? Thanks.
Mike Tyndall: The cadences does it accelerate from here considerably is there a point where that fixed cost other component in the EBIT walk might actually turn positive.
Mike Tyndall: If so when.
Mike Tyndall: Thanks.
Arno Antlitz: Yeah, Mike, in terms of bed profitability, look, to be very honest, I was talking about margin parity some days ago, and we did some really major improvement, first on raw materials. Look at lithium, look at other raw material prices. But to be honest, on the pricing side, there's still a lot of... models, a totally new chemistry, LFP, with a significant cost improvement, and also a new battery type. So it's a much more integrated type. We don't operate on models anymore. So we talk about, which we call then cell-to-pack, which is positive. We have a next generation electrical engine with much more integration of parts.
Mike Tyndall: Yeah, Mike.
Mike Tyndall: A pet profitability.
Mike Tyndall: Look.
Mike Tyndall: Two to be to be very honest I I was talking about margin parity at some some days ago.
And we did some.
Mike Tyndall: Really major improvement first on raw materials.
Mike Tyndall: Look at lithium look at other raw material prices, but to be honest on the pricing side, there's still a lot of.
Mike Tyndall: Support necessary for the B piece I mean do you look at the Internet side, you know all of US. So there is some support necessary.
Mike Tyndall: And and this is where we stand today, but we shouldn't give up because it is.
Mike Tyndall: I did two family.
Mike Tyndall: 2026, they kick off basically kick in for the folks on group and then also available to other folks walking.
Mike Tyndall: Brent models and in at least volume models.
Mike Tyndall: Chemistry, Lf PV for a significant cost improvement.
And also a new battery types. So it's a much more integrated type.
Mike Tyndall: We don't operate on models anymore. So we can talk about.
Mike Tyndall: Which will be called then tells you pick which which is positive free.
Mike Tyndall: After next generation electrical engine with much more.
Arno Antlitz: Although I studied engineering, I'm missing the word for it in Germany. You say Bauterintegration. So converters and all these kind of topics are then integrated into one electrical engine, which makes it really a step forward in terms of cost on the electrical engine. And more of these cost innovations kick in with the ID.2 family and then will be rolled out. So this is why we're also confident together with the scale and the site. The ID.2 family will be built in Mattarell, very cost effective from today's perspective, low labor cost. So this will be the first car which could really reach margin parity with the equivalent, which would be a T-Cross.
Mike Tyndall: The integration of parts.
Mike Tyndall: Although I tried to engineering at all I'm missing the virtual in Germany, you say portal integrates Jan so converters and all these kind of topics are then integrated into one electrical engine, which makes it really a step forward in terms of costs and electrical engine and.
Mike Tyndall: And more of this cost innovations kick in besides two family and then it will be rolled out. So this is why we're also confident together with the with the scale and.
Mike Tyndall: The site. It did I had two family will be built in Mato L. A very cost effective from today's perspective low.
Mike Tyndall: Labor cost.
Mike Tyndall: So this will be the first car.
Mike Tyndall: Which could really reach margin parent Tvs, if the equivalent which would be our and a T cross.
Arno Antlitz: and so on. For the time being, as I said before, and as I'm communicating externally and internally, we have to compensate for the margin dilution effect of the ramp-up of BVs on the cost side, and we have the chance for that. And you rightly mentioned to the overhead cost, and our clear goal is that throughout of the year 2025, there is a margin contribution, and we be guided for that as well. And if you take out Triton and Porsche, the relative burden on overhead cost is already positive in brand group core. It was not high enough to compensate for the ramp-up of BVs, but as I said before, the compensational effect on the fixed cost versus the burden on the margin dilution of the BV over the year should really turn, that the margin dilution effect relatively versus prior year should decrease, and the compensational effect of the cost side should increase with a clear target of showing a positive overhead cost contribution in the EBIT bridge throughout the year.
And.
Mike Tyndall: So and for the time being I said before and that's M communicating externally and internally we have to compensate.
Mike Tyndall: For the margin dilution effect of the ramp up of Pvs on the cost side and you have the chance for that.
Mike Tyndall: And you rightly mentioned to the overhead cost in our clear.
Mike Tyndall: The goal is that throughout the year 2025, there is a margin contribution and N. P. We guided for that itself as well and if you. If you take out threatening Porsche the relative burden on overhead costs is already positive in brand group core it was not high enough to compensate.
Mike Tyndall: <unk> for the ramp up of Pvs, but I said before the compensation of the effect.
Mike Tyndall: On the fixed cost.
Mike Tyndall: Versus the burden.
Mike Tyndall: On the on the margin dilution of the B B B V over over the year should really turn that the margin dilution effect relatively versus prior year should decrease and the compensation of the effect of the cost side should increase with a clear target of showing a positive.
Mike Tyndall: Overhead costs contribution in the EBIT bridge throughout the year.
Arno Antlitz: Got it, thank you. Thank you, Mike. We continue in the line. We have three still questions or questionnaires. Harald Hendrix from Citigroup. Harald, please go ahead. Yeah, thanks, Rolf. Thanks, Arno, for taking my question. You know, interesting, coming back from China, you know, it feels to me like the local for local strategy in China has worked incredibly well. And in this sort of global changing environment, tariffs in the States and all that sort of stuff, you know, what other learnings can we take from China? Right. And I'm talking specifically the technology decisions over there seem to be much, much faster.
Speaker Change: Got it thank you.
Speaker Change: Thank you Mike we continue in the line we have three two questions Oh questionnaires.
Speaker Change: All right Hendrix from Citigroup. Please go ahead.
Hendrix: Yes, thanks, Ralph Thanks, Arnaud for taking my question and you know interesting coming back from China, you know it feels to me like that local for local strategy in China has worked incredibly well and then they sort of global changing environment garrison sites and all that sort of stuff. What are the learnings can we take from China and I'm talking specifically the technology decisions over the Arris team.
Harald Hendrix: You know, the model decisions seem to be incredibly quickly. You're talking about IDT, ID2, things like LFP, integrated motor and stuff like that technology that China's obviously been working with for some time. How much can you take from China to think strategically about your regional businesses, including obviously the US? I know you've been trying to answer, but what I'm really thinking, what can you take away? What can you learn from there to make yourself, A, much more competitive and B, longer term, you know, more, you know, even more resilient? Thank you. This is a great question and this also imparts what we internally obviously also use.
Hendrix: It would be much much faster you know the model decisions seem to be incredibly quickly youre talking about ITT ITK things like LSP integrated military and stuff like that technology that China has obviously been working with for some time, how much can you take from China to think strategically about your regional businesses, including obviously the U S. I know you've been trying to answer, but what I'm really thinking.
Hendrix: What can you take away what can you learn from there to make yourself a much more competitive and be longer term and you know more of an even more resilient. Thank you.
Hendrix: This is a great question and this is also the MP.
Hendrix: Parts.
Hendrix: Internally, obviously also use tried to learn from China and there are a lot of elements you mentioned already look at the tech.
Arno Antlitz: Try to learn from China and there are a lot of elements you mentioned already. Look at the tech. In China, we work together in a cooperation with Xiaopeng to work on our backend. It's a Sony architecture and the same we do with Rivian in the rest of the world. We move from the current software to a Sony architecture, state-of-the-art, much more cost competitive as well. If you look at LFP batteries, in the rest of the world, you have normally NMC batteries, rather expensive. Yes, a better range, but expensive. China is basically working on LFP. What we are doing, we bring the LFP battery 2027 to the ID.2 family and then roll that out.
Hendrix: China in China, we worked together.
Hendrix: In our corporation with shopping to work on our back end, it's a solid architecture and the same with doing the Serbian and the rest of the globe. So we move from the current software towards solid architecture state of the art much more cost competitive as well.
Hendrix: So if you look at Lf pair batteries and in the rest of the world you have normally NMC batteries, rather expensive. He has a better range, but expensive China is basically working on LSP. So.
Hendrix: We are doing we bring the Lf pay battery.
Hendrix: 20, 722, the idea to family and then roll that out.
Arno Antlitz: We even want to combine it with our strengths. In ID.2, you can order an LFP battery for more affordable cost, but some compromise on range. You can basically order an NMC battery with much better range. We look on other topics like ADAS and also on speed of development. Obviously, we see that China is able to speed up product development, and we have a close look on that. We have a good understanding of that. Some topics, we really can basically learn from. Other topics, it's more in our DNA how many winter tests, how many summer tests you do.
Hendrix: And we even want to combine it with our strengths. So 92, you can order a L shaped battery for more affordable cost but.
Hendrix: Some compromise on range and you can basically other than the NMC battery with much much better range. So we look on other topics like others.
Hendrix: And also on the speed of development, obviously, we see that China is able to speed up a productive element.
Hendrix: And we have a close look on that we have a good understanding of that.
Hendrix: Some topics, we really can basically learn from other topics, it's more in our DNA and how many window test how many so much as you do this is more like Volkswagen brand and group is really deeply rooted in safeguarding and end and making sure everything is basically.
Arno Antlitz: This is more like Volkswagen brand and group is really deeply rooted in safeguarding and making sure everything is basically perfect. This is what we look at on the other topics. To be very honest, in terms of speed, it's not only great technology. Sometimes, China people are just working harder, to be honest. They work like 10 hours a day, six days a week, and in two shifts in R&D department. We look at it on a two-shift system, perhaps here in Europe, or we basically... try to copy a two-shift system, develop things in Wolfsburg, and then push it in the evening to our development headquarters in Mexico and Brazil, and use the time there and get it back the next morning.
Hendrix: So this is what we look at on the other topics.
Hendrix: To be very honest in terms of speed to them, it's not only great technology, sometimes China people are just working harder to be honest. They they work like 10 hours a day six days a week.
Hendrix: And in two shifts in the R&D Department. So so we look at it on a two shift system perhaps.
Hendrix: In Europe, all the basic.
Hendrix: Basically.
Hendrix: Tried to copy it to shift system.
Hendrix: Things in Wolfsburg, and then push it in the evening to our development headquarters in Mexico, and Brazil, and use the time to and get it back. The next morning. So there is a lot of things we look at and you could expect.
Arno Antlitz: So there are a lot of things we look at, and you could expect also learnings to evolve in Wolfsburg from these.
Hendrix: Learnings from.
Hendrix: Evolve in both book from from from these topics.
Arno Antlitz: Great, thank you. Thank you, Harald.
Hendrix: Alright, thank you.
Stephen Reitman: And we continue with Stephen Reitman from Bernstein. Stephen, please go ahead. Yes, good morning. I have some questions, please.
unknown: Thank you Harold and we continue with Stephen Reitman from Bernstein, Steven. Please go ahead.
Speaker Change: Yes, good morning, I have two.
Stephen Reitman: Obviously, the situation is shifting very fast, but will you tell me your current understanding of the status of your plants in Mexico, and particularly our engine plant? You're one of the only of the Germans that actually have manufacturing on the North American continent for engines. I understand that obviously you're supplying the Volkswagens, but not Audi produced in Mexico. How are those engines being treated? Are they fully USMCA compliant? Do you believe that the engines come in tariff-free into the United States? Can they be used in Audi products? That's the first question.
unknown: Questions. Please obviously the situations is shifting very cost, but what can you tell me your current understanding of.
unknown: The status of your plants in Mexico, and particularly our engine plant you're one of the only if the Germans are actually have manufacturing on the north American continent for engines.
unknown: I understand that obviously you are supplying the volkswagens, but not Audi produced in Mexico.
unknown: How are those engines being treated or are they fully U S. MCA compliance do you believe that the engines come entire free into the United States.
Speaker Change: Can they be used in Audi products. That's the first question.
Stephen Reitman: The second question is on the progressive margin. Obviously, I understand the underlying margin was 5.9%, but even still, how do you feel that compares to where you think it should be? Obviously, we know that last year was burdened by the significant problems you had with the starter belt generators, which meant you couldn't supply the V6 and the V8. But given the dynamic situation, you're talking about the European market, this seems still a little bit on the low side.
Speaker Change: The second question is on the progressive margin.
Speaker Change: Obviously, you understand the underlying margin was five 9%.
Speaker Change: But even still how do you how do you feel that is compares to where you think it should be obviously you know that last year was burdened by the significant problems you had with the starts about generators, which meant you can supply the V six into the eights, but given the dynamic situation.
Speaker Change: Talking about the European market seems still a little bit on the low side and finally youll, giving you mentioned about the profitability of the BV and obviously you've had a surge in BB sales.
Stephen Reitman: Finally, you mentioned about the profitability of the BEVs, and obviously, you've had a surge in BEV sales. Given the fact that the phase-in could come in, it obviously still has to be approved by the parliament. Does that make some sense for you to ease back on some of these incentives, the €3,500 starting you're doing on the ID.3? Because as I said, you're very much more confident about some of your new products coming in 2026 and 2027, which will make it much easier then to make your average CO2 requirement over the three-year average. Thank you. Thanks for these three questions.
Speaker Change: Given the fact that the.
Speaker Change: The phasing could come in is obviously still has to be approved by the parliament does that make some sense for you to maybe to ease back on some of these incentives to three and a half thousand euros, starting youre doing on the <unk> three mm because they said, you'll probably much more confident about some of your new products, which takes in 2027th which will make it much easier to make.
Speaker Change: COC requirement over the three year average.
Speaker Change: Yes.
Speaker Change: No Stephen.
Speaker Change: Thanks for that these three questions.
Arno Antlitz: Of course, we have a plant in Mexico, an engine plant, and what I just mentioned is, for example, the 2, we call it 2-11, in English, in German, we call it 2-11, this plant is basically producing the engines for Volkswagen. And they go into the Volkswagen cars. And this would be also the potential engine for the range extender for the Scout. Not a turbocharged version, naturally aspirated, but this is so. We still use that, and let me also remind of another topic we decided long before the tariff discussion. In the course of the Zuppungspakt, we will allocate the current goal of to Mexico in the run-out to make space here for great new models on the SSP, we call it on a game-changer project.
Speaker Change: <unk>.
Speaker Change: Yes of course, we have a plant in.
Speaker Change: In Mexico and engine plant.
Speaker Change: And what I just mentioned is for example, the two to be call. It 10 to 11.
Speaker Change: In English.
Speaker Change: We call it to address this plant.
Speaker Change: It's basically producing the engines for forex for them.
Speaker Change: And and.
Speaker Change: And then they go into the folks watching our costs and this would be also the potential engine for the range extender for Scott.
Speaker Change: Another turbocharged version.
Speaker Change: Naturally aspirated, but this is so.
Speaker Change: So you said and let me also remind off of another topic, we decided long before the tariff discussion.
Speaker Change: In the.
Speaker Change: And the cause of the tuples parked.
Speaker Change: We will allocate the current course.
Speaker Change: To the.
Speaker Change: And to Mexico in the runoff to make space here for new great New models on the SSP.
Speaker Change: On the call is on the game changer project.
Arno Antlitz: And so most of the Golfs we built in Mexico will be basically for the European market anyway. So there will be a future for the plant in Puebla and also for the engine plant, also in whatever setup you can think of in the future. All is currently not producing under USMCA, so this is why the reason they have even a higher tariff. And as I said before, we look at various options to improve the situation.
Speaker Change: And so most of the gulfs, we'd be built down in Mexico.
Speaker Change: We'll be basically for the European market anyway, So there will be a future for the for the plant in Puebla and also for the engine plant.
Speaker Change: Also in whatever setup, you can think of in the future.
Speaker Change: And what is currently not.
Speaker Change: Producing under U S. MCA. So this is why the reason they have even though even in the higher tariffs and as said before we look at various options.
Speaker Change: To improve the situation.
Arno Antlitz: We had the question on the BV sales. and the change of the of the Legislative Regime. To make that very clear, even if the regime changes and we have three years' time to fulfill the target, that would not put any pressure away from us or from other OEMs. We still need every gram because, from today's perspective, we will see still a burden in 2025, perhaps a smaller burden in 2026, and, from today's perspective, be over-filling in 2027. What helps us is that we can put together the three years and can take together the burden in 2025 and basically...
Speaker Change:
Speaker Change: Yes.
Speaker Change: The question on the PV cells and <unk>.
Speaker Change: The change of the.
Speaker Change: Of the legislature regime.
Speaker Change: To make that very clear, even if the regime changes.
Speaker Change: And we have three years' time.
Speaker Change: To fulfill the target that would not put any pressure away from also from other Oems, we still need every crumb because from today's perspective.
Speaker Change: We will see a still a burden in 2020 five perhaps a smaller burn in 2026 and from today's perspective leap B.
Speaker Change: <unk> filling in 2027, what helps US is that we can put together the three years.
Speaker Change: And can take together the burden in 2020 five.
Speaker Change: And basically.
Speaker Change:
Arno Antlitz: and can offset it with the 2027 positive. And just to remind you, in 2026 um Then the ID.2 family kicks in, and then 2027, the ID. Everyone, we are very excited about this car. And with these two cars kicking in from a range, price range, $25,000 on ID.2 family, $20,000 plus ID.1 family, we are very confident that we can heavily overachieve in 2027. And we have the chance to then take the three years in combination. But coming back to your question, that wouldn't put pressure away from the industry or us. for 2025 and 2026, we have to concentrate on improving the cost of the electric cars.
Speaker Change: So Saturday.
Can.
Speaker Change: Offset it with the 2027.
Speaker Change: Positive.
Speaker Change: To remind you in 2026.
Speaker Change:
Speaker Change: Then the idea to family kicks in.
Speaker Change: And then 'twenty 'twenty seven the idea everyone. We are very excited about this car.
Speaker Change: And with these two costs kicking in.
Speaker Change: Hum.
Speaker Change: From from a range price range 25000 on 80 family.
Speaker Change: 82 family 20000 class IV one family, we are very confident that we can heavily overachieve in 2027, and if you have the chance to them to take take the three years and in combination, but coming back to your question that wouldnt put pressure away from the industry or us.
Speaker Change: For 2025, and 2026, we have to concentrate on improving the costs.
Speaker Change: Off the electric cars.
Arno Antlitz: It's clear to say not making compromises in the interior or in quality, rather on the things I discussed before on the battery chemistry, and to significantly and consequently implement a future Volkswagen, which will be the biggest single element to compensate on the cost side for the continuous ramp up of the BVs and the martian illusion of the BVs until 2027. And as I said, with the ID.2 family, the martian illusion effect of the BVs should really then be much smaller than today. and Audi. Yeah, Audi obviously has basically the same effect. In March, in the launch of the BVs, they did also...
Speaker Change: It's clear to say not making compromises in each year on a quality rather on the things I discussed before on the battery chemistry.
Speaker Change: And two significantly and consequently, implement future Fox, one, which which will be there.
Speaker Change: The biggest single element to compensate on the cost side for for the for the continuous ramp up of the bvs and demonstrably loose enough to be lease until 2027 and as it is the idea to family the margin dilution effect of of the Bvs should really then.
Speaker Change: Be much smaller than that today.
Speaker Change: And Audi.
Speaker Change: Audi obviously has the basically the same at the same effect.
Speaker Change:
Speaker Change: In in March and the launch in PV said that it also.
Arno Antlitz: very well on the Q6, E6. Deliveries to customers were up, and they had some special effects. And what you could expect from Audi, going forward, the positive restructuring effects from Brussels, they also negotiated, now in negotiation with the Berks Council, also reduction of their workforce, I think in the magnitude of 7500, and these effects should give the same positive tailwind as on the Volkswagen side, and the margin, the guidance is 7-9%. Thank you. Thank you, Stephen.
Speaker Change: Very well on the Q six.
Speaker Change: Six deliveries to customers, the up and and they had some special effects and what you could expect.
Speaker Change: From Audi and.
Speaker Change: The and it's.
Speaker Change: Going forward they they the positive restructuring effects from from Brussels. They also negotiated Noah in negotiation with the Bronx Council also a reduction of their workforce I think in the magnitude of seven seven and a half thousand and this does affect.
Speaker Change: The same positive headwind or tailwind as as is.
Speaker Change: Folks are on site and the margin guidance of 7% to 9%.
Speaker Change: Thank you.
Philippe Bouchard-Jeffries: And we are coming to the last question. Philippe, best for last. Please go ahead. Thank you very much. Good morning, Philippe Bouchard-Jeffries. Two questions. First one is we talk about guidance, but of course, it's all pre-tariffs and we know tariffs are going to happen. Against that, you've taken that $600 million provision on CO2 in your Q1 accounts. And I'm just wondering, what is the scope for Volkswagen to reverse that provision, especially on the basis of the banking system that's going to be put in place in the summer, we hope? And the second point is we talk about earnings, but no cash flow.
Speaker Change: Thanks, you Stephen and we're coming to the last question Filipe Best Philosophy. Please go ahead.
Speaker Change: Thank you very much good morning prescribed Jefferies two questions. Please.
Speaker Change: First one is and we were talking about guidance, but of course, it's all pre terrorists and window tariffs are going to happen.
Speaker Change: Against that you've taken that 600 million provision on C. O. Two in your Q1 accounts and I'm just wondering what is the scope for Volkswagen to reverse that provision.
Speaker Change: Especially on the basis of the banking system, they're going to be put in place in the summer we hope and the second point is we talk about earnings but no cash flow are you, giving us a guidance.
Philippe Bouchard-Jeffries: You've given us the guidance. And I'm just trying to understand, we have cash burn in Q1 that was expected. I'm just trying to think, what can you tell us about, is the $4 billion kind of M&A still on the cards for 2025? What's the outlook for dividends from China? And as it seems like your net cash provision come under some pressure, how do you see the leverage and the funding of the financial services at this stage as an additional source of stress or not? Thank you. Yep. Philip, thanks very much for your questions and I'm not 100% sure whether I understood the question right.
Speaker Change: Just trying to understand we have cash burn in Q1 that was expected.
Speaker Change: I'm just trying to think what can you tell us about.
Speaker Change: Is the 4 billion kind of M&A still on the cards for 2025 whats the outlook for dividends from China.
Speaker Change: And as it seems like your net cash position come on come on.
Speaker Change: Coming to some pressure.
Speaker Change: How do you see the leverage and the funding of the financial services at this stage as an additional source of stress or not thank you.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Got it thanks very much for your questions.
Speaker Change: I'm not 100% sure whether I understood. The question right I tried to answer then I ask you whether that's what we ask for look we provisioned.
Philippe Bouchard-Jeffries: I tried to answer them and ask you whether that's what we asked for. Look, we provisioned 600 million in the first quarter. If the European Union would change the legislative regime throughout the year, we don't expect that 600 to significantly increase than for the full year. That would be basically then almost the whole burden we would have provisioned for already then in the first quarter. But why is that still – why I'm a little bit cautious, that obviously depends on your expectations for the next three years. So as you understand how volatile the markets are and it depends on our ramp-up targets on BEVs in 2026 and 2027 and obviously to calculate that because we have to take the ramp-up of BEVs in 2027 into account to make a three-year calculation, which in the nature of the subject is basically volatile.
Speaker Change: $600 million in the first quarter, if the European Union, but what's changed.
Speaker Change: The Lake is like.
Speaker Change: Regime and throughout the year and we don't.
Speaker Change: Expect that 600 to significantly increase then for the full year that would be basically then almost the whole burden b would have provisions for already then in the first quarter, but.
Speaker Change: Why is that still but I'm, a little bit cautious that obviously depends on your expectations for for the next three years. So as you understand how how volatile the markets are and it.
Speaker Change: It depends on our ramp up targets on bvs in 2020, six and 2027, and then obviously to calculate that because we have time to take the ramp up of babies in 2020 seven into account to make a three year calculation rich.
Speaker Change: And in the nature of the subject is basically volatile. So this is why I'm, a little bit cautious about $600 million.
Philippe Bouchard-Jeffries: So this is why I'm a little bit cautious. But 600 million, perhaps a little bit less than should be then the whole burden for the full year. Was that your question, Philip? Yes, exactly. So I was just trying to think, can you reverse, but I think your answer is no, it may not increase but it's not going to reverse. It may not increase, perhaps I don't think that – I don't expect that we can reverse significantly but the first quarter burden would then be already the burden then for the full year, which is also good news for the quarters to come.
Speaker Change: That's a little bit light model, a little bit less than it should be then the whole burden for the full year. What was that your question Phillip Yes, exactly. So I was just trying thing is can be reversed by letting you answer is no. It may not increase but it's not going to reverse.
Speaker Change: It may not increase.
Patrick Hummel: Patrick I don't think that I don't expect that we can reverse significantly, but the first quarter burden would be already the burden and for the full year, which is also good news for the quarters to come exactly okay. Thanks.
Philippe Bouchard-Jeffries: Exactly. Okay, thanks.
Philippe Bouchard-Jeffries: So and on the cash flow, I think we were very precise on the cash flow guidance to the five billion more towards the lower end of the range. You mentioned the four billion. One is for Rivian, some M&A we had already. And of course, we look at to the topic. On the other hand, we are glad to announce at least the first small step on the trade, increasing free flow. So that works also in the positive direction. I don't rule out that we stand, I don't expect that we stand still there, we have to look at that.
Patrick Hummel: So and on the cash flow I think we were very precise on the cash flow guidance to two 5 billion more towards the lower end of the range.
Speaker Change: You mentioned the 4 billion one is for Arabian some M&A we had already.
Speaker Change: And of course, we look at it to the topic on the other hand you back.
Speaker Change: We are glad to announce at least the first small step on the trade.
Speaker Change: Increasing free fraud, so that works also in a positive direction.
Speaker Change: And and.
Speaker Change: I I don't rule out that we stand.
Speaker Change: One would expect that we'd still have you have to look at that might be also a small chance.
Philippe Bouchard-Jeffries: Might be also a small chance. over time, of course, not in the next weeks and months. And yeah, this is where we stand. And the cash flow that we also guided is significantly burdened by the outflow of cash in the magnitude of $2 billion by restructuring measures we decided on last year. You also have to take into account the dividends from China. As always, we don't exactly guide the dividends from China, but by and large, the proportioned operative result from this year would be the China dividend for next year. And obviously, what you can expect this year is basically.
Overtime of course, not in the next weeks and months.
Speaker Change: And this is where we stand in the cash flow and we also guided to significantly burdened by the outflow of cash in the mechanism of $2 billion Bye bye.
By restructuring measures, we decided on last year. This you also have to take into account.
Speaker Change:
Speaker Change: And and the dividends from China.
Speaker Change: As always we don't exactly guide the dividends from China, but by and large the proportionate operative result from this year would be the China dividend for next year and obviously, what you can expect this year.
Philippe Bouchard-Jeffries: strongly related to the Chinese operative result we achieved last year. This is how I do we think of the Net Cash Flow, and obviously giving the... unsecure, and the current geopolitical environment, we are really focused on cash, preserve cash, increase liquidity to have a really strong liquidity base because a strong liquidity base, and we have a strong liquidity base, is the best assurance in a challenging environment. And yeah, one other topic, the... You said it, I think it was a dividend. No, it was related to the bank, to the financial services. No, it's even the other way around.
Speaker Change: It's basically.
Speaker Change: Strongly related to the Chinese operative result, we achieved last year.
Speaker Change: This is how it or.
Speaker Change: Do you think of there.
Speaker Change: Hum.
Speaker Change: Cash flow and obviously, giving the.
Speaker Change: Do you do.
Speaker Change: Unsecured.
Speaker Change: Yeah, the current geopolitical environment.
Speaker Change: We.
Speaker Change: I really focused on cash preserve cash increase liquidity to have a really strong.
Speaker Change: Liquidity base, because it's strongly quiddity base and we have a strong liquidity base.
Speaker Change: It's the best.
Speaker Change: Assurance in our in our <unk>.
Speaker Change: The challenging environment.
Speaker Change: And one.
Speaker Change: One other topic.
Speaker Change: The deep.
You said it.
Speaker Change: I think because the dividend no it was related to the bank until the financial services.
Speaker Change: No. It's even the other way round, we achieved Oh, we achieved a dividend from from the bank. So its actually the other way around right.
Philippe Bouchard-Jeffries: We achieved a dividend from the bank, so it's actually the other way around. And please think about the project Corrale, which has been concluded last year. So financial services, I would not see any funding pressure in the current environment. Of course, rating, we always have to take inside and we are, of course, very much focused on I'm keeping our strong investment grade rating in proper shape. But because of the cash flow development, short term, I don't see any additional funding. Great, thank you very much.
Speaker Change: Right.
Speaker Change: Okay, and then think about the project called I live which has been concluded last year, So financial services.
Speaker Change: I would not see any funding pressure and in the current environment of course, yeah rating, we always have to take insights and we are of course very much focused on.
Speaker Change: The keeping our strong investment grade rating and proper shape, but because of the Castro development short term I don't see any additional funding pressure.
Speaker Change: Great. Thank you very much.
Rolf Woller: Very good. That brings us to the end of the Q&A session. Thank you for all this discussion.
Speaker Change: Very good that brings us to the end of the Q&A session.
Speaker Change: For this discussion.
Rolf Woller: We are now at the end of the investor and analyst call. If anything was left unanswered, you know where to find us. You have our telephone numbers and the RR team in Wolfsburg is very happy to take any additional questions.
Speaker Change: We are now at the end of the Investor and analyst call.
Speaker Change: And if anything was left on the onset yeah, you know where to find us E. F O telephone numbers into our team and was focused very happy to take any additional questions.
Rolf Woller: Our next event will be the Volkswagen Group ESG Conference, which will be held next week on May 7th. And then we will have the annual general meeting on May 16th. H1 results will be released on July 25th.
Speaker Change: Our next event will be the Fox One group ESG Conference Conference, which will be held next week on may 7th.
Speaker Change: And then we will have the annual generally general meeting on May 16th.
Speaker Change: Each one results will be released on July 25th.
Operator: And we are now doing a short break before we continue with the Q&A session for the journalists, which will start at about. and thanks very much for your numerous participation.
Speaker Change: And we are now.
Speaker Change: A short break before we continue with the Q&A session for the journalists, which will start at about.
Speaker Change: 10, 25 people and thanks very much for your numerous participation take care and for those who have a long weekend a good long weekend and for those in the U K with a bank holiday on Monday.
Operator: Take care and for those who have a long weekend, a good long weekend, and for those in the UK who have a bank holiday on Monday, also a long weekend just with a Monday edit. Thank you very much and speak soon. Thank you also from my side. Thank you for your time.
Speaker Change: Also long weekend, just with a Monday at it. Thank you very much and speak soon.
Speaker Change: Thank you also from my side. Thank you for the time.
Speaker Change: Yeah.
Speaker Change: [noise] [music].
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: [music].
Operator: So hello, everyone. Welcome back to our Q1 call. I just want to remind you that if you want to ask a question, please press star 1. If you think the question has been already answered, you can redirect your question by pushing star 2.
Speaker Change: So hello, everyone will come back to our Q1 call I just want to remind you that if you want to ask a question. Please press star one if you think the question that's been already answer to you can direct the question by pushing star two.
Frank Johansen: And I can see one question, Frank Johansen from DPR.
Speaker Change: And I can see one question Franco Hudson formed if you all please go ahead.
Frank Johansen: Please, Frank, go ahead. Yes, hello. Frank Jones from DBA here.
Mike Jones: Yes, Hello, Hello, Frank This is Mike Jones from people.
Frank Johansen: Just three quick questions. The first one, as you stated on the slides, the figures of the employees with Volkswagen after the Volkswagen concept. The figures are remarkably below the headcount stated last year during the negotiations on the terrace. So why are these figures so much below it? Is it just because you exclude trainees and all the workers already in the passive part of the Altenstein side or was the figure simply too high last year?
Speaker Change: Just three quick questions. The first one is youll stay on it.
Speaker Change: On slide <unk>.
Speaker Change: So she goes if it goes off of our employees.
Speaker Change: Walks Falcon afterwards, so folks like concept.
Speaker Change: So if he goes out.
Speaker Change: Remarkably pillows.
Speaker Change: Head Count stated last year during the negotiate negotiations on the tariffs. So why are these figures so much below what is it just because you exclude trainees and all the work is already in the past this part of the tight side or otherwise simply.
Frank Johansen: The second one, you stated that you're looking for options to probably improve production in the U.S. Does that include any plans for producing Audi in the U.S., for example, in Chattanooga or the new Scout plant and probably even Porsche? And the third question, there are often reports on interest of Chinese car makers, for example, Chery, to produce in German Volkswagen plants for the European markets. Can you comment anything on that?
Speaker Change: It's simply too high last year.
Speaker Change: One you stepped up your own.
Speaker Change: Looking for options to improve our production in the U S. A download that include any plans for producing already in the U S. For example, in Chattanooga or doesn't your skull plant.
Speaker Change: Probably even Porsche.
Speaker Change: And some questions out there Oh I'm Austin a.
Speaker Change: With costs on entrust Chinese carmakers fucks up generally to produce in German folks locked bombs falls of European markets can you comment anything on that.
Arno Antlitz: Okay, thank you. Yes, Frank, thanks very much for your three questions. And you're absolutely right. Look, we have basically two different... figures, how we steer the Volkswagen Zukunft. One is basically what we communicated, what you could see in the annual report. The overall. number of employees that work in the Volkswagen AG. There are three elements to that. One is basically the biggest one is the active workforce. This is the people who are still on board and who are still in the processes and actively work. And then the second one is people who are in the passive phase of early retirement program.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Yes, Frank Thanks, very much for your three questions and you're absolutely right look you have basically two.
Speaker Change: Two different.
Speaker Change: Forget debate, how we steer the folks fund took them one is basically in book would be communicated but you could see in that northern part is the overall.
Speaker Change: Number of the number of employees that that broke into folks on a cheap and there are three elements to that one is basically the biggest one is the active workforce. This is the people who are still on board and it was still in the process as an extra few book and then the second.
Speaker Change: One is people who are in the Pepsi phase of early retirement program.
Arno Antlitz: And the third number of people is apprenticeships and trainees. And exactly as you said, the figures are basically still the same figure. What we report here is the active workforce that are still in the plants and in the factories and in the offices, because this is how basically the project team is doing the project. But basically, the figures are communicating, and the reduction is also basically equivalent. Sometimes you have a little bit of difference because only after the people leave, after the passive phase of retirement, they basically then they are deducted to the overall workforce.
Speaker Change: And in the third number of people is apprenticeships and trainees and exactly as you say if the figures are basically there's still the same figure what we report here is the active workforce that does still.
Speaker Change: In the.
Speaker Change: The plant and the new factories and in their offices because there's this whole it basically the project team is during the project, but it basically did the figures.
Speaker Change: Communicating and and the reduction is.
Speaker Change: It is also basic.
Speaker Change: Basically equivalent sometimes you've had a little bit different because one only after the people leave after the PSC phase of retirement.
Speaker Change: They they basically and then deduct it to the old boy workforce, but there is absolutely did.
Arno Antlitz: But they are absolutely the same. going to the same direction.
Speaker Change: This.
Speaker Change: Going to the same direction.
Arno Antlitz: Yeah, and on the other two topics, I don't know whether you have been in the Analyst and Investors call already, we look into various options, of course, that includes Audi, but it's really too early to say and to comment on specific topics. Sorry for that, Frank. I don't want to disappoint you, but this is where we stand today.
Speaker Change: Yeah, I know the other tool.
Speaker Change: I don't know whether you.
Speaker Change: I've been in the analyst and Investor call already.
Speaker Change: Looking into various options of course that includes already but it's really too early to say and to comment on specific topics sorry for that Frank If you don't want to disappoint you, but does this maybe stand today and also on that.
Arno Antlitz: And also on the Chinese competitors or partners who want to are looking for potential sites in Europe. There's also no new decision or no new information I can share.
Speaker Change: Chinese competitors or JV partners.
Speaker Change: Looking for potential sites in Europe.
Speaker Change: It was a no new decision or no new information that country on this topic.
Arno Antlitz: Okay, thank you.
Speaker Change: Yeah.
Speaker Change: Okay. Thank you.
Christine Amann: Okay, so next in line, as I can see, is Christine Amann from Thomson Reuters. You want to start, please? Yes, good morning, Mr. Antlitz, good morning, Mrs. Zollino. I know that the question has been asked repeatedly on the tariff, but I can't kind of come around with that. For one, can you comment on the... the decision Trump took last night for some relief, will that be? Will you take that as a chance to produce more in the U.S.? What about the ID4 in the U.S. and electric vehicles who are likely not to be as popular as they were under Biden?
Speaker Change: Okay. So next in line is I can see the casino.
Speaker Change: From Thomson Reuters you want to start please yes.
Speaker Change: Yes, good morning, I understand Thats good morning, Mr. <unk>.
Speaker Change: The question has been asked repeatedly on the terrorists.
Speaker Change: But I can't.
Speaker Change: I can kind of come around with that so one can you comment on that.
Speaker Change: Decision Trump last night for example relief will that be.
Speaker Change: What do you take that as a chance to produce more than.
Speaker Change: What about the I D.
Speaker Change: As in electric vehicles.
Speaker Change: Who are likely not to be as popular as they were going to buy.
Christine Amann: Is there any consideration about a change in the product mix in Chattanooga? And when will we get some information on the tariffs? We have seen four weeks tariffs are in now, more to come. When do you think you can make a comment on how much that would really cost Volkswagen? Porsche yesterday said they are kind of calculating from month to month. So will we see something with Volkswagen? and Osnabrück. You have said that you have nothing to say on discussions with Chinese JV partners, but what is with other interested parties in the plant? Is there anything we can expect soon?
Speaker Change: Is there any chance or any.
Speaker Change: Consideration about the mix a product mix change in the product mix in Chattanooga.
Speaker Change: And.
Speaker Change: When will we get some information on the terrorists you have seen four weeks cars are in now more to come when do you think you can make a make a comment on how much that would really cost.
Speaker Change: M Flex back.
Speaker Change: Closer last night yesterday said they are they are kind of calculating from month to month. So what do we see something that's working well.
Speaker Change: And Aznar Brook, you have said that you have nothing to say on discussions with the Chinese JV partners, but what is with other.
Speaker Change: Trusted parties and the plant is there anything we can expect something soon.
Speaker Change: Okay.
Arno Antlitz: Yeah, thanks for this question. As you rightly said, I can't really... comment on tariffs and I don't really want to comment on that. on the communication that happened last night, of course, we have a look at. calculate the impact on our business. But it's – so as I said before, we concentrate what we have in our hands, we stand ready to work with policy makers to find good solutions for the U.S., and this is where we stand. In terms of Chattanooga, don't forget that in Chattanooga, it's not only ID4, it's also the Atlas, Atlas Crossport.
Speaker Change: Yup.
Speaker Change: Cause he thinks about this Christian as you rightly said, though I can't really.
Speaker Change: Comment on tariffs and I don't really want was appointed.
Speaker Change: Comment on that.
Speaker Change: On the.
Speaker Change: Communication that it had been last night B of course, we have to look at it the calculator.
Speaker Change: The impact on our business, but it's a so as I said before it will be.
Speaker Change: What we have in our hands, we stand ready to work with policymakers to find good solutions for the yes and.
Speaker Change: This is where we stand in terms of tenant move out and don't forget that into new grads not only add before it's also the Atlas gross but they're really very well received by the customers.
Arno Antlitz: They're really very well received by the customers. They're also very successful in terms of margin. And what we do look in is we potentially complement the Atlas and Atlas Crossport with a hybrid solution. There's also no technical decision made so far, but obviously, we look into this topic. Why? Because we see from the overall market that electrification is also picking up in the U.S., but not as fast as everybody thought. So we look into various options to add – for example, hybrid drivetrain for the Atlas, Atlas Cosplan, and potentially also. Tyron for the T-Gauntlet. And yeah, when do we communicate on that?
Speaker Change: They're also very successful in terms of margin.
Speaker Change: What we do look at it.
Speaker Change: Is it would be potentially complement our Atlas and Atlas cross border with a hybrid solution or there's also no technically decision made so far but obviously, we look into this topic why because we'd be we'd be received from the overall market that electrification is also picking.
Speaker Change: In the U S, but not as fast as everybody thought so we look at into various options to add it.
Speaker Change: For example.
Speaker Change: Hybrid drivetrain for the Atlas at those costs down and potentially what was it for the.
Speaker Change: For the tighter on front the Tiguan.
Speaker Change: And yep it quite.
Speaker Change: When do we go.
Arno Antlitz: Sorry, I don't want to be unpolite, but really our position is as soon as we have more visibility, we will come back to you and to the capital market and basically guide for the tariffs. But currently, we really must say the effects and the interactions cannot be conclusively assessed so far, and this is why we guide specifically before tariffs. Ja, Osnabrück, ähm, the desert from my... to find out. sustainable and economic future-proof solutions for the factory, as always said. But also, I must say, for this we need the help of all stakeholders involved. This is what I can tell you on Osnabrück.
Speaker Change: When do we communicate on that so you don't run unpolite, but what's really all position us as soon as we have more visibility we will come back to you to you and to the capital market.
Speaker Change: And base.
Speaker Change: Basically guide for the tariffs.
Speaker Change: But that's currently really must say it affects them day into actions cannot be conclusively assessed so far and this is why we guide specifically.
Speaker Change: Before tariffs.
Speaker Change: Yeah, So brook.
Speaker Change: That's it for my.
Speaker Change: How big is it.
Speaker Change: Topic that says basically nothing to do with the Christian with Chinese, but what we can say we have no new decision also broke hum.
As board of directors, we feel obliged to find it.
Speaker Change: Stay nimble and economic future proof solutions for the factory has always said, but also we I must say for this we need the help of all stakeholders involved this is where they can continue on those but again no new decisions on those that book so far.
Arno Antlitz: But again, no new decisions on Osnabrück so far.
Monica Raymond: Okay, thanks. Next in line would be Monica. Monica Raymond. Monica, the floor is yours. Wonderful, thank you so much Pietro and thank you so much Ms. Arno. I just have a few questions. One is a clarification on the import duties that were booked in the first quarter. I heard you earlier on the analyst call say something about $150 million, but I remember, I believe in the pre-release, that there was a figure of $300 million. And if you could just offer clarity on that. Another question that I had was about the future of the Mexico plant, which you spoke about on the analyst call.
Speaker Change: Okay. Thanks next in line would be money kind of Monica Raymund Moneycard flows floor is yours.
Monica Raymund: Wonderful. Thank you so much petro and thank you so much Mr. Oh, no I just have a few questions. One is a clarification on the import duties that were booked in the first quarter I heard you earlier on the analyst call say something about 150 million.
Monica Raymund: But I remember and I believe in the pre release that there was a figure of 300 million and if he could just off a clarity on that the other another question that I had was about the future of the Mexico plant that you spoke about on the analyst call you said.
Monica Raymond: You said engines from the Mexican plant are due to be used in scout vehicles. I was just wondering if you could clarify whether or not those engines are USMCA compliant and whether or not they're also used in the Atlas models that are being built in Chattanooga. And then my other question would center on sort of battery strategy. Can you still confirm that the plan is to use batteries from PowerCo in Canada in the future scout models? And if you could also talk about the battery strategy for EVs on the US market. I know you said that what you're learning from China is that you are going to be more flexible.
Monica Raymund: Engines from the Mexican plant or are due to be used in scout vehicles. I was just wondering if you could clarify the whether or not those engines are U S. M C. A compliant and whether or not they're also used in the Atlas models that are being built in Chattanooga and the.
Monica Raymund: My other question.
Monica Raymund: Center on sort of battery battery strategy can you still confirm that the plan is to use batteries from power co in Canada, and our future Scout models and if you could also talk about the battery strategy for Evs on the U S market I know you said that what Youre learning from China is that are you.
Monica Raymond: For example, with the ID2 that consumers will be able to either buy LFP batteries or MMC batteries, depending on what their price preference is. Do you see something similar for the EV market in the United States and how will you square that with production plans in Canada for batteries there?
Monica Raymund: I am trying to be more flexible. So for example, let's see I D too that our consumers will be able to either buy unless P batteries or NMC batteries, depending on what their price preferences do you see something similar for the EV market in the United States and how will you square that with production plants in Canada four batteries there.
Monica Raymund: Thank you.
Arno Antlitz: Monica, thanks for your questions. Clarification on the import duties, the 150 million we had to book, and this is not a contradiction to what I said, our outlook is before tariffs, this 150 million we had to adjust basically the cars that were in transit already a while ago, then I think the tariffs were introduced 2nd of April. Is that right? Early April. And so we had to adjust the value of the cars that were in transit, which also referred to the first quarter. So this is basically 150 million. But this is... obviously something we had to technically do under IFRS.
Speaker Change: Yeah Monika.
Speaker Change: Thanks for your Christmas clarification and import duties.
Speaker Change: The.
Speaker Change: 150 million you had to book them.
Speaker Change: And this is not a contradiction to what does it all Oh Wow outlook before tariffs dishonest 50 million have you had to just basically the costs that the entrance in transit.
Speaker Change: In already.
Speaker Change: By then I think that the tennis went into juice second of April.
Speaker Change: You said early.
Speaker Change: Early April.
Speaker Change: And so we had to adjust the value of the cost that's the intrinsic which also referred to the first quarter. So this is basically the $150 million.
Speaker Change: But this does this.
Speaker Change: Obviously, its something we had to technically do under Ifr Ias Mexico plant yeah. They are.
Arno Antlitz: Mexico plant. Yeah, what I can say and what I can confirm is that obviously the cars for Volkswagen, where the Mexico engines are part of in total are USMCA compliant. We have to come back to you later, Monica, whether the single... If you take into account only the... the engine itself, whether it's that USMJ compliant or on that level, this is something I don't have in mind, sorry for that, we come back to you with the answer for that. But yes, obviously they go into the Atlas. And we haven't also made no major changes on the on the power.
Speaker Change: What I can say and what I can confirm is that.
Speaker Change: Obviously, the the cause for expand where the Mexico engines, a puddle in total our U S. M. C. A complaint do you have to come back to later money come whether the singular.
Speaker Change: If you take into account only the the.
Speaker Change: The engine itself, where they said he was M&A compliant.
Speaker Change: On that level. This is something I don't have in mind, so for that'd be come back to you with the answer for that but yes, obviously that go into the Atlas.
Speaker Change: And do you happen to also made no major changes on the on the powered cool.
Speaker Change: And investment plans, so far with what we did change obviously, but this is I think you just.
Arno Antlitz: You could have expected the speed of the ramp-up of the power core capacity in total. Obviously, it's adjusted to the speed of the ramp-up of the total capacity we need in terms of batteries. We always said power core is basically providing 50% of the batteries for the Volkswagen group. And since we took down... some of our estimates in terms of ramp-up BEVs in Europe, slightly, but specifically in the U.S., of course, we adjust also the ramp-up of capacity. at the PowerCore unit, but that is not a basic, a systematic change, it's more like an adjustment.
Speaker Change: You could have expect the ramp up the speed of the ramp up.
Speaker Change: Of the power coal capacity intelligent, obviously is adjusted to this beautiful the ramp up.
Speaker Change: Of the total capacity, we need in terms of batteries, we always said Paul of course, basically providing 50% of the batteries for the folks Fung group and since we took down.
Speaker Change: Some of our estimates.
Speaker Change: Estimates in terms of ramp up E vs in Europe, slightly but specifically in the U S of course, we are just also the ramp up of capacity.
Speaker Change: At the powerful.
Speaker Change: Uh huh.
Speaker Change: Unit, but there's not a basically a systematic changes more like an adjustment.
Arno Antlitz: to ramp up what you could expect. And when I talked about Scout, the engine we want to use in Scout, obviously Scout is an electric car, a fully electric car, future-proof, but we will offer it in two versions. One is basically with a big battery, so fully electric, and then there's a so-called... Range Extender technology, so it's then a smaller battery, we add an engine, a combustion engine, and this combustion engine charges then the battery, which gives then a total range of 500 miles, which is absolutely competitive in that. And this engine would come from.
Speaker Change: So the ramp up with what you could expect from us.
Speaker Change: And it went when they talked about Scott the engine that'd be one you're using Scott obviously scout is an electric car are full.
Speaker Change: The electric car future proof, but we will offer it in two versions one is basically because of big batteries or full electric and then there is the so called.
Speaker Change: The range extended technology. So it's in a smaller battery, we add to and an engine in combustion engine. In this comparison engine charges than the battery, which gives them. The total range of 500 mines, which is absolutely competitive in that segment and this engine would come from Mexico.
Arno Antlitz: Monica, the contradiction you found between the ad hoc announcement and today's statement with the 150. In the ad hoc announcement, the 0.3 billion were for the diesel topic and the vehicles in transit. And today we just presented the vehicles in transit effect isolated, and that was the 150. So you can conclude from that, that the diesel topic was also around 150.
Speaker Change: When it cut the contradiction you're falling between the AD hoc announcements in today's statement with a 150, India talking announcement to 0.3 billion, whereas for the diesel topic and the vehicles in transit and today, we just presented the vehicles in transit effects isolated and that was the $1 50. So you can conclude from that.
Speaker Change: That the diesel topic was oh, so around about 50.
Monica Raymond: Thank you. That clarifies.
Speaker Change: Thank you that clarifies things.
Lazar: Okay, so I can see Hamlet's plot would be next. Lazar, please ask your questions. Hi, Arno. This is Lazar speaking from Handelsblatt. I mean, the figures, they were known so far, so they were no surprise. But I was wondering what the implications or consequences of the figures are. So do you need to maintain your cost discipline, perhaps even tighten up your existing restructuring programs? When I'm looking at the core brand's margin of 0.5 percent, I think this is particularly something that everybody in the management should be causing concern or should be a cause of concern for.
Speaker Change: Okay. So I can see how net flat would be next <unk>. Please ask your questions.
Speaker Change: Hi, Arnaud I'm. This is loved always speaking from Handelsblatt.
Speaker Change: I mean the figures they were known so far so they were no surprise, but I was wondering what the implications or consequences. The figures artist. So do you need to maintain your cost discipline, perhaps even tighten up your your existing restructuring programs for them when I'm looking at the core brands margin 0.5.
Speaker Change: And I think there's this particularly something that everybody in the management should be causing concern or should it be a cause of concern for so yeah. So I was wondering what the consequences of the figures are and why you need to readjust.
Lazar: So, yeah, so I was wondering what the consequences of the figures are and where you need to readjust. And the second question would be why exactly you are so, maybe you can give some light to why you are so optimistic when it comes to the outlook for 2025. I know that this is pre-tariff, but nevertheless, there are some headwinds, for example, that you need to rise above share and other things that would definitely be headwinds for you. So I'm wondering where you see that you will be in line with your guidance. And my last question is just a clarification from the investors call.
Speaker Change: And the second question would be why exactly you are so maybe you can give some light as to why you are so optimistic when it comes to the outlook for 2025 I know that this is pre terrorists, but nevertheless, there are some headwinds I'm for example that you need to rise up I'm sure and other things that are yeah that that would definitely.
Speaker Change: B M headwinds for you so I'm wondering.
Speaker Change: Where you see that you will that you will be in line with your with your guidance and my last question is just a clarification from the investor's call.
Lazar: I mean, you were quizzed quite often about the impact from the tariffs and I think it was then something that you mentioned between the questions that you said, well, there are assessments between 2 and 4 billion Euro when it comes to impact on the tariffs. And this is not your own conclusion, but this is something that you also comprehend. And I just wanted to to reconfirm that I understood that right. Thank you. Maybe on the Laza, on the question raised, I think it was Tim, what I wanted to say is that there are many analyst reports out there.
Speaker Change: I got a I mean, you work with quite often about the impact from the terrorists and I think it was that something that you mentioned.
Speaker Change: Between the question that you set a world there are assessments between two and 4 billion euro them. When it comes to O P impact on the terrorists and this is not your own conclusion, but this is something that you're also comprehended I just wanted to to reconfirm that I understood that right. Thank you.
Speaker Change: Yeah, maybe on the lesser on the on the question raised I think it was Tim Yeah. That's what I wanted to say is that there are many analyst reports out there.
Arno Antlitz: Arno gave the breakdown of the 700,000 units we currently sell in the U.S. And the analyst then just simply calculated the current tariffs in discussion for any parts produced in Mexico and for the imports into the U.S. And what I wanted to say is that they are coming up with calculations of an impact between two and four billion, depending on the assumptions they take. And we just said that we can comprehend actually those calculations without confirming that this might be the final impact on Volkswagen. Miloš, I really want to reiterate what I just said, it's really...
Speaker Change: Arnaud gave the breakdown of the 700000 units. We currently sell in the U S and the analyst than just simply calculated and the current.
Speaker Change: Terrorists in discussion for any parts produced in Mexico and for the imports into the U S and what I wanted to say is that we that that they're coming up with calculations often impact between two and 4 billion depending on the assumptions they take and we just said that we can comprehend X speed.
Speaker Change: Those calculations without confirming that this might be the final impact on flextime right. Okay. Thank you.
Speaker Change: Well as I I really wanted to reiterate what I just said it's really good.
Arno Antlitz: too early to really. conclusively assess this effect. I really appreciate your questions, because they are to the point of what we have to do now currently. What we did make very clear is that there are some underlying effects that burdened brand Volkswagen, but even with the underlying effects, the margin is only 2.2%. And we are absolutely committed to implement the Volkswagen Zukunft program over the course of the year. And I would like to remind you on the three topics. First and foremost, it's basically done. It's the implementation of the piece that's on the wages, which is implemented already.
Speaker Change: Too early to to really.
Speaker Change: Conclusively assesses effect does this I would I'd rather stick to this.
Speaker Change: Combination because it's really too early and as soon as we have a better insight on that topic.
Speaker Change: Come up.
Speaker Change: But there's an assessment, but currently it's really.
Speaker Change: Because we cannot conclusively is is it because it might have what was the volume impact which nobody knows.
Speaker Change: And so it's really too early to say.
Speaker Change: Yeah.
Speaker Change: I would I really appreciate your.
Speaker Change: Yo Yo Yo Christians ought to be caused there to the point of what you have to do no currently.
Speaker Change: What is it what would we did make very clear that there are some underlying.
Speaker Change: Affects that burdened brand folks wrong, but even with the underlying effect of margin, it's only 2% 2.2%. So.
Speaker Change:
Speaker Change: And we are absolutely committed to implement the folks buying took them broke run over the course of the year and that I would like to remind you on the three topics first and foremost it's basically done it's the implementation.
Speaker Change: Off after the piece of debt that's on on on the on the wages, which is implemented already so.
Arno Antlitz: relief on the wages that ramps up to 1.5 billion roughly in the course of 2025 and 2026. We make very good progress in becoming leaner. We showed you the figures throughout 2024 and also in the first quarter of 2025, 2,000 people. So this is 2,000 workers. could start on that. And also, I monitor it personally closely and the team is monitoring closely the improvement measures in the factories, for example, for becoming more productive. So the factory costs are reduced, to be very honest, not to the amount we were planning for. They were very ambitious targets, but they made a good first step and we will have a lot of progress on that.
Speaker Change: Yep relief on the wages that ramps up to 1.5 billion roughly.
Speaker Change: The cause of 2025 and 'twenty 'twenty six.
Speaker Change: We make very good progress in becoming leaner. We showed you the figures throughout 'twenty 'twenty four and also in the first quarter 'twenty 25 2000 people.
Speaker Change: This is because this is a quick.
Speaker Change: Good start on that and also I'm monitory personally closely and the team is monitoring closely there.
Speaker Change: The improvement measures.
Speaker Change: Emissions in the factories for example for becoming more productive so do the the factory costs or it used to be very honest I'm not till the month, we were planning for that but very ambitious targets, but they've made a good first step.
Speaker Change: And we will.
Have a lot of.
Speaker Change: Off of.
Arno Antlitz: on the web. $150 million from $600 million for CO2. And for brand Volkswagen, it's the same holds true what's for the group. So the relative burden of the BV ramp up will become slower quarter by quarter. And we are really confident that we can improve the contributions from Volkswagen's program quarter by quarter. Everybody's fully committed in the brand and in the group. All the stakeholders work on it. So I'm really positive about the momentum we build there. And we will have a very close eye on achieving all these targets. From today's perspective, we are not planning additional measures.
Speaker Change: Of pressure on that topic, because we have to make sure that we achieve these targets. The reason why that is.
Speaker Change: What I said before the BV targets chop the Roes in the brand folks along even a little bit higher than an average or this is a great great success.
Speaker Change: And in the Mexico the of that they had to pone hundred 50 billion from the 600.
Speaker Change: The 150 million from our $600 million mm for C O two.
Speaker Change: And for brand folks along as the same holds true what what's for the group. So the the the relative burden them off the BB ramp up there it becomes slower quarter.
Speaker Change: Quarter by quarter and to be up.
Speaker Change: We are really confident that we can improve the contributions from Volkswagen.
Speaker Change: Two quick fro Graham quarter by quarter, everybody is fully committed.
Speaker Change: In in in the brand and in the group and all the stakeholders broke on that so I'm really positive about the momentum with both you and.
Speaker Change: And we will have a very close eye on on achieving all of these targets.
Speaker Change: For today's perspective, you are not planning additional measures, but we are very committed 200% increase implement the measures. We are we decided on N V. The brand is on a good moment.
Lazar: But we are very committed to 100% increase, implement the measures. we decided on, and we are, the brand is on the... Okay, Lazar, does this suffice your question about why we are so optimistic or still optimistic about 2025? Yeah, maybe you can also add more, a bit more light, what are, I don't know, is it the order bank that makes you so optimistic or the order intake? That's what I was wondering about. Yeah, what is actually the thing that could, yeah, that makes you fulfill your guidance for 2025? Always saying that there are not tariffs included.
Speaker Change: Okay. That's all this is suffice your question about why we are so optimistic I feel optimistic about 2025.
Speaker Change: Yeah, maybe you can also add.
Speaker Change: The more a bit more light what are I don't know that the order bank that makes us optimistic for the order intake. That's what I was wondering about Oh, what is actually the thing that could yeah that makes you fulfill your guidance for 2025.
Speaker Change: <unk> always saying that there are not terrorists included.
Lazar: Now, again, thanks for... As I said before, we are really positive about the customer side. Both the products are very well received, the feedback is great from the customers, and the feedback we can measure not only in feedback from the customers but also in order intake. Order intake was up significantly 30%, which is a lot, and specifically order intake for EVs were up significantly. And the order bank stands about a million, and I said in the analyst call already, this momentum continued in April as well, so the order bank is even rising. And this Autobank is basically helps, is reaching well into the third quarter.
Speaker Change: So again, thanks, Thanks Paul.
Speaker Change: Well this question as well, but as I said before we are really.
Speaker Change: Positive for Belgium at the customer site.
Speaker Change: The products are very well received the feedback is great from the customers and the feedback we can measure and not only in and feedback from the customers, but also in order intake order intake was up significantly, 30%, which is a lot and specifically order intake for bvs.
Speaker Change: But the up.
Speaker Change: Significantly so these are.
Speaker Change: And the order bank stands about Dominion and I've said in the analyst call already this momentum continued in and in April last fall. So the order bank is even even rising.
And this order bank is basically helps us reaching well into the third quarter. So we have a very good good good visibility and let's not forget our more great caused us still to come in and all of our product momentum 2025 mm and and also 2026 with the other two family.
Arno Antlitz: So we have a very good, good, good visibility. And let's not forget a more great cars are still to come in, in, in our product momentum, 2025 and, and also 2026 with the ID.2 family and, and other cars from, from Porsche and Audi. So we are confident that we have a very strong tailwind from the customer side. What we need to do is now implement our strategy and work really, really consistently on the cost side to compensate for the margin dilution at NSF.
Speaker Change: And and other costs from from Porsche and Audi.
Speaker Change: So.
Speaker Change: We are confident that we have a very strong tailwind.
Speaker Change: From from that from the customer side, what we need to do is no implement our strategy and work really.
Speaker Change: Really consistently on the cost side to compensate for the module loosen that up and I said before.
Stephen Reitman: Okay, so I can see the Wall Street Journal. I suppose from London. I hope the weather is as pleasant as it is here. Stephen, how are you doing? Good, thank you. Thank you for taking the question. Indeed, the weather is very nice here. You've obviously been asked many times about the U.S. production system and production outlook, and I think we've exhausted avenues for querying you on that. So, to ask a slightly different question about the U.S., or two different questions. One is, what do you see in terms of demand? Did you see any pre-buy momentum in the first quarter as people anticipated tariffs and price increases?
Speaker Change: Okay. So I can see that most of the channels are I suppose from London I hope the weather. There's plenty that says this is Steven how are you doing.
Speaker Change: Hi, good. Thanks, you. Thank you for taking the question indeed, the weather is very nice yeah.
Speaker Change:
Speaker Change: You've obviously been asked many times about the U S production system, and and production outlook and I think we've exhausted avenues for querying you on that.
Speaker Change: Sure.
Speaker Change: So to us here.
Speaker Change: Question about the U S.
Speaker Change: Well two different questions one is.
Speaker Change: Well what are you seeing in terms of demand did you see a kind of pre any pre buy momentum.
Speaker Change: In the in the first quarter.
Speaker Change: People anticipated tariffs and price increases.
Stephen Reitman: Have you seen any – has that continued, I guess, in the second quarter? Any color you can give on the shape of U.S. demand, or is it simply kind of as normal? Conversely, have you seen any weakness because of consumer confidence as a result of the tariffs? So, the U.S. demand picture, as far as you can tell, would be interesting to hear about. Secondly, also in the U.S., you've talked in the past about increasing sort of local for local vehicle development as well as production. Can you talk a bit about that, what you might be thinking for that, is that also involved in discussions about, with your discussions with the US administration, or is it a different thing?
Speaker Change: Have you seen any avid has that continued I guess in the second quarter and any color you can give on the shape of U S demand or does indeed kind of as normal.
Speaker Change: Conversely have you seen any weakness because I.
Speaker Change: Consumer confidence as a result of the terrorists so.
Speaker Change: The U S demand picture as far as you can tell them would be interesting to hear about secondly, also in the U S. You've talked in the past about.
Increasing them.
Speaker Change: Local for local vehicle development as well as production.
Speaker Change: Can you talk a bit about that hum.
Speaker Change: You might be thinking.
Speaker Change: Is that what's involved in discussions about with your discussions with the U S administration or at a different thing.
Stephen Reitman: on the development side rather than the production side. And finally, can you... The strong order intake in Europe is obviously quite a striking feature of these results, 29%. You've talked a lot about the products obviously going down well with customers. So, is this really only a Volkswagen thing, I mean, or is it a market thing? Obviously, you're the market leader by some margin in Europe. So, one would, you're a bellwether for what's going on in the European market. Can we take it as a sign of basically, can we take this strong order intake as a sign of a bit of a rebound in consumer confidence and demand for cars more generally, or are you mainly in your estimation, taking market share from your competitors through a slew of new products.
Speaker Change: Hum on the development side, rather than the production side.
Speaker Change: And finally can you.
Speaker Change: The strong order intake in Europe is obviously quite striking feature of these results 29% is that new.
Speaker Change: You've talked a lot about the products obviously.
Speaker Change: Going downward with customers can you.
Speaker Change: Yeah.
Speaker Change: Is this this is really only a Volkswagen thing I mean or is it a market thing.
Speaker Change: Obviously, you are the market leader by some margin in Europe. So what would your bellwether for what's going on in the European market can we take it as a sign of it can we take this stockholder and take as a sign of a bit of a rebound.
Speaker Change: And in consumer.
Speaker Change: Confidence.
Speaker Change: And demand for cars more generally.
Speaker Change: Or are you mainly.
Speaker Change: In your estimation, taking market share from your competitors through right.
Arno Antlitz: Thank you. Yeah. The question is, in terms of years, there were some... in the market. You could hear from some pre-buy momentum, but not significant for the Volkswagen group. This is what I can say. There were not significant pre-buy momentum there. We had a positive sales momentum in the U.S., but that basically continued throughout 2024 already. And it's more the continuation of a very good trajectory that the brand Volkswagen had already in 2024. If I remember me right, I think it was 16 percent up in 2024. And so this is a continuing positive momentum in the brand.
Speaker Change: The slew of new products. Thank you.
Speaker Change: Yep.
Speaker Change: Thanks for the progression in terms of yes.
Speaker Change: There are some.
Speaker Change: In the market that you could hear from some pre pre buy momentum, but not significant for the folks on group does but what I, what I can say.
Speaker Change: They are not significant pre buy.
Speaker Change: Momentum has had to be out there.
Speaker Change: That's a positive.
Speaker Change: Hum.
Speaker Change: Sales momentum in U S, but that basically continuing throughout 'twenty 'twenty four already and it's more the continuation of a very good trajectory.
Hum.
Speaker Change: Folks rung had already in 'twenty 'twenty four.
Speaker Change: Remember, we right to think about 60% up in 'twenty 'twenty four and so this is a continued positive momentum.
Speaker Change: And in the brand and really.
Arno Antlitz: I must say, we talked a lot about the potential effects of tariffs and what's our options to localize. I really can't give you more light on that topic so far. What I can say in terms of development, we work together with Riven already. We founded a joint venture with Riven, we invested a billion in that joint venture and invest in Riven. And this is obviously also a significant amount of R&D, which is done locally for the Volkswagen group. I would like to remind you that basically all the Western world vehicles of the Volkswagen group will be based on that architecture that is developed by the joint venture together with Riven and between Riven and Volkswagen.
Speaker Change: I must say, we talked a lot about the potential effects.
Speaker Change: Effects of tariffs and what what's all options to localize I really couldn't.
Speaker Change: I can give you more more light on that topic, so far what I can say in terms of.
Speaker Change: Development.
Speaker Change: We worked together with sleeping already I'll be founded a joint venture with they're going to be missed a billion in that joint venture and invest in and driven and there's obviously also a significant amount of R&D.
Speaker Change: Which is done.
Speaker Change: Locally.
Speaker Change: The folks fund group I would like to remind you that basically all the restaurant world vehicles of the folks one group would be based on.
Speaker Change: On that architecture that is developed by the joint venture together with moving it between driven enforcement. So there's already a lot of local R&D happening so far.
Arno Antlitz: So there's already a lot of local R&D happening so far. And we are ramping up this already. And just as a remainder, also the ID.1 will be one of the first cars that hit the showrooms in Europe based on that software, which is developed then in the joint venture in the US. And we are increasing that effort, together with Rivian. And your third question, auto intake. Obviously, we have no visibility on the auto intake. In Europe, on our competitors, we see only our auto intake, and our auto intake is strong. We were very vocal about that.
Speaker Change: And we are ramping up this already and just as a remainder or was it. The other one will be one of the first cost that hit the showrooms in Europe based on that software, which is developed in India and the joint venture in the U S.
Speaker Change:
Speaker Change: And and increasing that that that effort.
Speaker Change: Together with <unk>.
Speaker Change: And as you said the question order intake Apis.
Speaker Change: Obviously, we don't we'd be up you have no visibility on the order intake.
Speaker Change: And in Europe on our competitors, because we see all of our order intake and order intake is strong people are very vocal about that what we can say in terms of share. If you look at the deliveries.
Arno Antlitz: What we can say in terms of share, if you look at the deliveries, specifically in the BV market, in the deliveries in the first quarter, we gained significantly share, BV market share in the BV segment versus last year. This is what we can say, and everybody can. And the BV market share is even higher than our overall market share, so that's clearly a strong signal for the market success of our BV strategy and that the BV cars are very well received by the customers, private customers as well. And so Arno is absolutely right, last year, just to give you the precise figure, in the US we were up 15.2% for the Volkswagen brand alone, that amounts to 380,000 vehicles if you compare it to the year 2023.
Speaker Change: Specifically in the PV market in the deliveries in the first quarter, we gained significantly sure PV market share in the PV segment.
Speaker Change: Versus last year. This is what we can say and everybody can measure and the BV and market share is even higher than our overall market share. So that's clearly a strong signal for the market success of our EV strategy and that the b because of a very well received by the customers private customers.
Speaker Change: As well as fleets.
Speaker Change: That's all I know is absolutely right last year I'm, just sort of give you the precise figure in the U S. We were up 15.2% for the Volkswagen brand alone at the mall.
Speaker Change: <unk> 380000 vehicles, if you compare it to the year 2023 was that I'm, Oh, I see Christian Miss because it's for my thoughts that Christian do you want to take the call.
Arno Antlitz: With that, I see Christian Miskins from FRZ. Christian, do you want to take the call? Thank you very much. It's just the last special question on China. Thinking back about the Shanghai show... you have a global planning route. I hope you understand. Yeah, no, that's really fair, the question is in the 165 billion that the China product offensive is included, all the products you saw, but there's, I must say, you have to take into, or we have to take into account how we account for in China. If the products come, for example, from our own Anhui joint venture, they are basically 100% in our books.
Speaker Change: So thank you very much that's just been a lot faster.
Speaker Change: As your question on China.
Speaker Change: I'm thinking back about a Shanghai show.
Speaker Change: I thought about the investment that you make.
Speaker Change: On a global scale.
Speaker Change: What do you actually do it you want to bring down the cost to I think 960 billion euros.
Speaker Change: And that question is Ed.
Speaker Change: Does this also apply to China.
Speaker Change: The investments you plan or what they are so so.
Speaker Change: Other investments.
Speaker Change: Chinese joint venture declined by the same amount.
Speaker Change: Mitchell.
Speaker Change: It's a global planning rod.
Speaker Change: I hope you understand the question.
Speaker Change: Yeah, no that's a deferred at this question.
Speaker Change: In the 165 billion that the China product offensive is included.
Speaker Change: All of the products you saw but that's I must say.
Speaker Change: You have to take into or we have to take into account, how we account for in China and if the product come for example from our own <unk> joint venture.
Arno Antlitz: It's fully consolidated. If the models are produced and basically also. basically sold by our joint venture. This is both true for Volkswagen, SAIC, and FRA, and also for Audi. For these models, the R&D and CAPEX, you don't see in our books. You see it in the books from our joint ventures, but we don't have also the revenues and all the other elements of the P&L, not in our books. So it's really the joint venture business is accounted for in equity. So in $165 billion are our own models, but also our technology. As you know, we ramp up 4,000 people in the VCTC, so we develop local for local.
Speaker Change: They are basically 100% in our books, it's fully consolidated if the the models are produced and basically what's the.
Speaker Change:
Speaker Change: So basically so it by our joint venture they just both through for folks fun, Psych and and if Avi.
Speaker Change: And also for Audi for these models that the R&D and Capex you don't see in our books, you'll see it in the books for our Chinese joint ventures, but we don't have the revenues and all the other elements of the P&L not in our books. So it's really the joint venture business is accounted for in equity so.
Speaker Change: 965 billion, our own models, but also all our technology.
Speaker Change: As you know we ramp up.
Speaker Change: 4000 people in the V C. T C. So we develop local for local.
Arno Antlitz: For example, the joint venture with Corizon Robotics and all these other initiatives that we have in our books, these are part of the $165 billion. Yeah and let's say on a less technical level can you say that like um you you keep up the speed in with investments in China and you don't uh take let's say the foot from the gas while you while you while you break in the rest of the world or or would that be false to say? Absolutely. Thanks for the question. I mean, if you have been in Shanghai or you have basically looked at the Shanghai display, there's absolutely no sign that we take the foot from the gas in China.
Speaker Change: For example, joint venture with Cauterizing Robotics, and all these other initiatives that we have in our books. These are part of the Hunter at 65 billion.
Speaker Change: Yeah net sales less technical effort can you said that like you.
Speaker Change: You you keep up the speeds in our investment in China, you don't.
Speaker Change: Take China first.
Speaker Change: First from the gas value and why do you why do you break in the rest of the world.
Speaker Change: Oh yeah.
Speaker Change: He wants to say.
Speaker Change: No absolutely. Thanks for the question and if I mean, if you have been in Shanghai, we have.
Speaker Change: Basically looked at the Shanghai display there's absolutely no sign that we did take the foot from the guests in China actually the other way around it's really a model offensive.
Arno Antlitz: It's actually the other way around. It's really a model offensive. I think 30 models until 30 are hitting the market. And so this is, yeah. We are doing both, as I said before, we want to stay strong in Europe, we want to defend our strong position in market share, we want to basically... come back in China to all strengths, but we want to significantly grow in the U.S. This is our way forward.
Speaker Change: I think 30 models until 30.
Speaker Change: Are hitting the market and so this is yeah.
Speaker Change: They're doing both yeah.
Speaker Change: We want all of it as as I said before we wanted to stay strong and Europe wanted to defend our strong position in market share.
Speaker Change: One of them basically.
Speaker Change: Come back in China to all strings, but we want to significantly grow in the U S. This is a all away from it.
Monica Raymond: Okay, and I can see, Monika, you are back in the queue. You want to ask another question or have a follow-up? I do. Thank you so much for taking my one last question. With regards to the order books in Europe and how strong they are, one million is certainly very impressive. I was wondering if you might be able to speak to the strategy on rebates for electric vehicles in Europe and whether or not that had any impact. I'm aware that rebates sort of took effect towards the end of 2024 and that the ones that were implemented in the first quarter were sort of extended through to the end of June.
Speaker Change: Thank you.
Monica Raymund: Okay, and I can see Monica you are back in the queue and ask another question a follow up.
Monica Raymund: I do thank you so much for taking my one last question with regards to the order books are in Europe, and how strong that 1 million are certainly very impressive I was wondering if you might be able to speak to them. The strategy on rebates for electric vehicles in Europe, and whether or not that had any impact I'm aware of that.
Monica Raymund: Rebates sort of took effect towards the end of 'twenty 'twenty four and not the ones that were implemented in the first quarter were sort of extended it through to the end of June.
Monica Raymond: I know that France, Italy, Germany, Spain have several rebates on the ID family. I was just wondering, do you anticipate that those rebates will be continued on in the further quarters? And if so, how do you see that as potentially impacting the margins on the bed sales? Yeah, Monika, thanks. Obviously, I cannot do make forward-looking statements on rebates or pricing in public, as you're aware of. But what I said generally is that we have a good momentum. We expect from this perspective that the BVs will continue to be margin dilutive, and we have to compensate for that on the cost side, but 2026 kicks in, then a whole new generation of battery, and also, obviously, the margin on the BV side for Audi and Porsche are stronger, so these are the effects on the P&L, which we discussed about this.
Monica Raymund: I know that France, Italy, Germany, Spain Hum several rebates on the IV family I was just wondering do you anticipate that those rebates will be continued on in the further quarters and if so how do you see that essentially impacting the margin on the bed sales. Thank you.
Speaker Change: Yeah, Monika things up what we've seen that kind of come to kind of do make forward looking statements on rebates all pricing in public and as you're aware of them, but but but what I. What I said generally is and that we have a good momentum and the.
Speaker Change: We expect from today's perspective that there be vs will continue to be margin dilutive.
Speaker Change: And we have to compensate for that on the cost side and then but 2026 kicks in then all new generation of battery and also obviously.
Speaker Change: The margin on the PV side for Audi and Porsche are stronger and so these are the are the effects on the P&L, which we discussed about this this morning.
Speaker Change: Okay. Thank you.
Good.
And if I'm not mistaken, I think that was the last question that would conclude our call. I just want to mention if anything was missed or was unclear, please reach out to us. As I said, the contacts can be found, either you know them or you find them on our group website. I'm happy, we are happy to talk to you soon. In the meanwhile, stay safe and take care. Bye. Ladies and gentlemen, the conference is now over. Coruscant, and thank you for participating. You may now disconnect your lines. Goodbye.
Speaker Change: Good if and if I'm not mistaken I think that was the last question that what's conclude our call.
Speaker Change: I just Wanna mention if anything wasn't missed Oh was unclear and please reach out to US is that the context can be found either you know them. All you find them how group website.
Speaker Change: I'm happy we are happy to talk to you soon in the Meanwhile is stay safe and take care bye.
Speaker Change: Yeah.
Speaker Change: Ladies and gentlemen, the conference is now over thank you for choosing chorus call and thank you for participating in the conference you May now disconnect your lines Goodbye.
Speaker Change: [noise].