Good morning again, this is Sebastian. Welcome to our media Q&A. Oliver and Arno are sitting next to me, and we can right away start. If you want to ask a question, please press star one, and then you appear here in the list. The first one appears is from Hamburg, Christian Müßgens, FAZ. Christian, please.
Yeah, good morning. I hope you can hear me. Hello?
We can hear you.
Yeah, perfect. Thank you for taking my questions. I have two questions. First is, could you give a little bit more insight on the BEV order situation in Europe? I mean, you have talked about a lot about that, the market is not moving as fast as you have expected it to move. So what's your order intake, and what should it be like to utilize your capacities better? Maybe you can give some figures on that. The second question is connected to that. I mean, in Germany, government incentives to buy electric cars have been reduced, and given the reluctance of customers, maybe what are you asking for? Does Germany need a new program, a new incentive program?
What do you expect the politics to do?
Yeah, Christian Müßgens, thanks for your questions. Oliver Blume speaking. First of all, we still have a strong order bank of around 1,000 EVs. We have a good proof point in this year, being able to increase 50% of our BEV deliveries worldwide. In Europe, the situation is because some countries reduced or exit from their support for battery electric vehicles, on the other side, we have inflation effects and pricing effects because of higher material costs. In terms of Volkswagen Group, besides of the still strong order bank, we have seen during the last weeks a slightly positive development of our order bank.
We have to watch very deeply during the next weeks, how it will develop. At the end, everything depends often of the right product offering we have in the market to drive further on our ramp up of BEVs, not only in Europe, but also in China and in North America. In terms of support for the ramp-up curve of electromobility in Germany, there are three important factors. First of all, product. That's our responsibility, right pricing, right technology profile, attractive design. Then secondly, the charging infrastructure, and that's partly our responsibility as Volkswagen Group. We are planning to increase the charging points worldwide up to 2025 to 400 to 45,000 charging points.
On the other side, we need support from energy suppliers, for example, from the mineral industry, but also from the government and the communities to improve the charging, the local charging infrastructure, especially in the cities. Thirdly, to increase the source of renewable energies. There, the German government has got a ambitious target, but it's important to execute step by step at improving this. These three factors are important, and that would be the biggest support we can get. What I think, especially in Germany, for the commercial use, there would be helpful a support especially for the electric vehicles.
They are driving around a lot, in cities and in towns. Yeah, that's about your question on incentives.
We go from Christian to Victoria, Reuters. Victoria Waldersee, please.
Hi. Thank you very much. I have two questions. One just relating to the news yesterday about the XPENG, Volkswagen partnership. Could you just clarify what platform the two new models that you're jointly developing will be on? The Chinese release from XPENG said they would be on the G9 platform, but that wasn't mentioned in the Volkswagen release. Just to clarify that. A second question, just a broader one, I wonder if you could speak in a bit more detail about the value of a volume strategy as you move into the battery electric space. I feel like we're seeing these two strategies emerge, of gaining share by cutting prices or holding on to profit margins and financial robustness.
You say you're more on the values over volume side, you are still targeting a EUR 25,000 and a EUR 20,000 vehicle, evidently, you do still want to keep hold of that mass market. Could you just give us some specific examples of strategic decisions which prove the value over volume approach? That'd be really helpful. Thank you.
Okay, Victoria, may I start with your first question on XPENG and the platform approach? First of all, I think before I explained also with the investors our idea behind to do this and the big opportunities we have with sharing modules, components, and. We will use the G9 platform. All the technical details we will detail during the next weeks. Then deciding clearly using the best available technologies XPENG will offer, and combining it with our platform approach. To say it again, very clearly, that is only a part of our platform on our product strategy. We have for Volkswagen four segments.
It's the lower A-segment, the main A-segment, and the lower B-segment. We are providing with our own technology, for the upper B-segment, we will go for the G9 platform from XPENG, defining during the next weeks very clearly which part of modules or components we will use, combining it with Volkswagen technology. What is very clear, when we are using these kinds of technology, at the end, it has to be and it will be 100% Volkswagen in terms of driving ability, in terms of design, and in terms of touch and feel of the cars. May I hand over to Arno for the value over volume approach?
Yeah, Victoria, on the value of our volume, I said in the Capital Markets Day, we will focus really on the value and margin of our business. That means that we will explain pricing discipline both on the ICE and on the BEV side. We rely on strong products. We have fascinating brands, and we have also the technology which is getting better and better every day. We invest into technology in our platforms in Europe. In China, we mentioned already we improved the platforms there with Horizon Robotics and driving assisting functions, in-car entertainment. We have all the ingredients from our perspective we need to explicit strong pricing going forward. On the other hand, there's also an additional flexibility we have.
Although we are absolutely committed to ramp up our battery electric vehicles, we have also strong combustion engine cars, which have great margins and great cash flows. This gives us an additional flexibility on that topic.
The next question goes to Patricia Nilsson from Financial Times. To all the others, press star one if you ask a question, because Patricia is the last one on my list. If you wanna have the opportunity to ask a question, just press star one, and then you appear here on the list. With this, Patricia, please.
Hi. Thank you for taking my question. I want to start by asking, on deliveries, you've revised down your goal for deliveries, at the same time, you're saying supply chain issues are easing. Can you give a little bit more detail as to what's driven this? I have two more questions, and they're related to China, one, some observers have made the comment that Volkswagen partnering with XPENG here is an admission that the company can't make it on its own in China. I would love to get your comments on that. Secondly, I'm wondering, how is it impacting your long-running relationships with SAIC and FAW to partner with one of their rivals at the moment? Thank you very much.
Patricia, I will take the question on deliveries. We had a fairly mixed picture on deliveries in the first half of the year. On average, they were +13%, with a really strong growth in Europe, 25%, +25%. A strong growth in North America, +40%. In China, slightly below previous year. Based on that run rate, I would say we slightly changed our outlook. It used to be 9.5 million vehicles. Now, we moved it to the range of 9 million- 9.5 million vehicles based on the run rate in China. What you have to take into account is that the cars that we sell in China, we account for them only at the proportionate result, basically on equity.
They are not in our sales and not in our margins. This is the reason why our sales was up 18% and our margin was very strong. Our underlying margin was very strong, with 8.9%. Although we took slightly down the deliveries outlook in line with our value, our volume approach, we fully confirm our outlook for sales, and we fully confirm our margin target.
Patricia, let me come to your China question. Listen, for us, it's very important to fulfill the expectation of the Chinese customers. In our China strategy 2030, we agreed finally, the site of the Shanghai Motor Show, and was worked out in the months before, is to offer more solutions developed in China for China. We have our old product portfolio with MEB+, and in the future with SSP, for example. Picking partner solutions to hit directly in the Chinese ecosystem and to fulfill the expectations.
The cooperation with XPENG is to speed up in technology solutions and to widen our product portfolio and to tap into our white spots where we haven't got a product offering today. In terms of cooperation and future strategy with our long-term joint ventures, FAW and SAIC, we built also a clear strategy and agreed it with them during the last month. With FAW, for example, there we have the Audi approach with a new PPE factory, where we will bring, starting next year, new Audi products on a high battery level. With SAIC, for example, we decided the Audi cooperation also with sharing modules and components.
I think for all of us, it's positive to get approaches from partners, technology from partners, to make our solutions better and then having a better office for our customers. It is well thought and fitting well together in between partnerships like FAW and SAIC, and the new partnerships we are getting, and having a clear strategy behind, and everything thought from the customer perspective.
Thank you.
We have three more on the list, starting with Monica Raymunt from Bloomberg. Monica, the floor is yours.
Thanks so much. I guess my first question centers on the recent trip that you and the board took to North America. I was wondering if you could provide some color on that trip, specifically on where the Scout brand is, and where specifically North America fits in the performance program and in the savings efforts that are currently going on across the Volkswagen brands. Additionally, you mentioned that during this trip in North America, that some decisions were taken regarding technological advancements or technological decisions. I was wondering if you could also elaborate on that, please.
Yeah, Monica, may I start with the Scout approach, and maybe Arno can add a bit on our performance program in North America. First of all, we had a very good Scout presentation. For me personally, first time being in South Carolina, close to Columbia, and being able to be on our construction site there, making very good progress. We are getting full support from the authorities there, and we had the opportunity to talk with a governor of South Carolina. They are very proud to have Scout in South Carolina, and we are getting a lot of applications of people who want to work with us.
We think with the Scout approach for us, we are tapping in a wide spot for Volkswagen Group in the biggest profit pool. We do have in North America the rugged SUV segment, and the pickups are 30% of the market, and therefore, we see big opportunities. Using this historical heritage brand of Scout and bringing it to the future while combining the heritage of Scout with modern technology. You will mention it when you will see the design approach that there are still something in from the heritage Scout, but with a very modern interpretation.
There we had a lot of yeah, details to discuss, in terms of which technology we want to use, what will be the construction of this car, what will be the offering we will bring to the market, what will be the positioning of this car in this pickup and rugged SUV segment. For me, it was very promising what the team around Scott Keogh presented there. We hired the designer, for example, for Scout, and he brought a lot of new ideas how to optimize our design approach.
Yeah, I'm looking very much forward to ramping up this old new brand to the market and bringing us in a better positioning in North America. Maybe Arno can add something in terms of performance program.
Monica, we really agreed that we leave it to the brand Volkswagen to communicate their elements and size of the performance program and the topics per region. I would like to give a little bit flavor. I said before, it's like about 1/3 is on the volumes, on the mix and volume side and on the price side, and 2/3 on the cost side, and that's basically roughly true also for the U.S. We have a chance to really have even better mixes. Atlas Cross Sport are doing very well. On the cost side, it's the classical topics, fixed cost, productivity in the plants. There's an additional element that comes on top of to the normal cost work.
It's the synergies we can draw in the regions. Yeah, we have not only been in the U.S., we have also been in Mexico, and there, Canada is also part of the region. There's an additional element of that, working closer together. We have sourcing departments in both countries. In working closer together in the regions, there is an additional element on that. Again, as I said, I really want to leave it, or we really want to leave it to the brand to communicate their program in more detail.
The next question goes to Dow Jones News and Markus Klausen. Markus, please.
Yes, good morning. Thanks for taking my questions. You've already addressed the issue of margin development in the analyst call. I have one further question regarding this, the trend in the second quarter. Are you considering additional measures to support the return beyond those currently already planned, and also in view of the price war, particular in China? Second question belongs to the price development. We talked about the difficult situation in China. Can you comment on the price development in Europe? Thanks.
Markus, concerning the margin trend, what we communicated on the Capital Markets Day already is that we have launched a performance program in all brands, not only in brand Volkswagen, but performance programs in all brands, to make the group much more robust going forward. What we expected and what's now happening is that competition is intensifying in the third and fourth quarter. The whole industry is able to produce more cars, the availability of chips increases, and on the other hand, our customers are more cautious, and the result of that is a more intensified competition. What we agreed on in the Group Board and also in the brands, that we need and we will achieve first results of these improvement programs in the second half of 2023 already.
There are no additional measures on top on the programs, but we will put a lot of focus in our group and in the brands to get the first results even this year, to make us, yeah, more resilient, in an intensified, competition.
The last question for this call goes to Christian Müßgens. We started with you, and you got the last one. Please, go ahead.
Thank you. I really feel honored to start and make the last question again. It's just a short follow-up. I mean, Arno has just stressed that it's important to stay flexible in production of BEV and internal combustion engines. I mean, the actual problems with capacity utilization, maybe I'm wrong, but you can correct me, is affecting, in the first line, it's affecting plants that have already completely converted to electric cars, like Zwickau, for example, and on the way going there. Looking back, was it a mistake to transform complete factories as a whole to BEV? Are you maybe overthinking this strategy, staying more flexible in the future, and in the years to come?
Yeah, with this, two factories in Zwickau and Emden, this was a starting point to bringing quickly volume to the market. What we are doing there right now is especially the value over volume approach, that's you will see in the future as well, very focused on the market demands and then steering our factories. For all the other factories, it will go step-by-step, no?
We are going now through the transformation, like in Wolfsburg, but all the Eastern Europe factories or in Western Europe and in Spain, we have a plan for the next 10 years when we will get into with BEV models and up to which schedule we will have the ICEs. That's important, as I mentioned in the investors call, to have this flexible mix during the transformation, still offering ICEs, which brings us in the financial positioning, being able to finance the transformation to BEV, then offer hybrids and having a strong ramp up for electric cars. This will go step-by-step and plant by plant.
Mr. Müßgens , let me add specifically to your question. In order to be competitive in the future, we are working really on the cost side and on efficiency side also for our BEV cars. That wouldn't be possible if you have, like, a mixed line with combustion engine and BEVs. That would bring complexity, that would add inefficiencies. We are convinced that the way we are going forward, like having a 100% MEB platform, 100% electric platform with the MEB, having a 100% MEB factories, which are really then designed to the needs of an electric platform, will give us all of the costs, the cost base, to be very competitive in the market.
We go the extra mile, we go into overtime because Lutz Meschke sneaked in, and we will give him the chance to ask a question from Capital. Lutz,
Sorry for that, my question wasn't properly registered in first place. It's very short, it's a very short one, adding to the last statement. Since you're reducing in the moment the production lines in Zwickau and in Emden, and in the same time, you're planning to add MEB line in Wolfsburg, are you sticking to that plan also to the time schedule? Does it still make sense, or can we or will we see maybe considerations to change that? Thank you.
We are right now in our so-called work delegation, where we plan for the next years, which product we're going to produce in which plant. What we have done in Emden, for example, is a temporary effect, that shows very clearly, again, our focus value over volume. What we don't do is to produce any more cars for stock. We will balance it quite well. What is the demand in the market while focusing on our profit margins. That has nothing to do with the product strategy. This is clear. We stay to our product strategy in Zwickau and Emden, what we defined, while adding new battery platforms now to all the other factories.
With this, I say thank you to Oliver and Arno, and also to all of you for asking questions. Always good to have you. For those who have not enjoyed holidays yet, I hope they come soon . Take care. See you soon. Bye-bye.
Goodbye, and thanks for your question. Have a good vacation.
Ladies and gentlemen, this concludes today's conference call. Thank you very much for participating. You may now disconnect.