Volkswagen profit drops 20% in first quarter on lower sales

German carmaker Volkswagen on Tuesday said its operating profit dropped by 20% in the first quarter as weaker demand for its premium brands drove a drop in sales.

Operating profit came in at 4.6 billion euros ($4.9 billion) in the first three months of 2024, the company said. In the same time period in 2023, operating profit was 5.7 billion euros.

Volkswagen cited lower sales and higher fixed costs as well as "an unfavourable country, brand and model mix" as key factors in the profit decline.

Vehicle sales were down 2% in the first quarter, totalling 2.1 million units, the company said.

"As expected, our first quarter results show a slow start to the year," Volkswagen Group CFO and COO Arno Antlitz said in a statement.

The carmaker's luxury brand Porsche saw operating profit decline to 1.2 billion euros, down from 1.7 billion euros in the first quarter of 2023. The unit sold 71,000 vehicles globally in the first quarter, a 16% drop compared to the 85,000 vehicles sold in the same period of last year.

Lower volumes were related to product development as well as customs-related delays, Volkswagen said.

Volkswagen still expects to reach its 2024 financial targets, including a 5% rise in sales revenue, and a full-year operating margin ranging between 7% and 7.5%.

"We expect additional momentum over the course of the year from the launch of more than 30 new models across all brands. At the same time the effects our efficiency programs will gradually unfold as the year progresses," Antlitz said.

Europe traded shares of Volkswagen were down 2.6% at 9:00 a.m. London time.