Trends in the markets

TRENDS IN THE MARKETS FOR PASSENGER CARS AND LIGHT COMMERCIAL VEHICLES

In 2024, the volume of the passenger car market worldwide was slightly up on the prior-year figure, with most regions developing favorably. Western Europe was on a level with the previous year, while the Middle East region came in slightly lower. The supply situation continued to return to normal levels and the affordability of vehicles improved in some regions of the world.

The global volume of new registrations of light commercial vehicles in fiscal year 2024 was similar to the previous year.

Sector-specific environment

Along with fiscal policy measures, the sector-specific environment was affected by the economic situation, which contributed to the mixed trends in unit sales in the markets in the fiscal year now ended. The fiscal policy measures included tax cuts or increases, the introduction, expiry and adjustment of incentive programs and sales incentives, as well as import duties. In addition, non-tariff trade barriers to protect the respective domestic automotive industries made the movement of vehicles, parts and components more difficult.

Europe/Other Markets

In Western Europe, the number of new passenger car registrations in 2024 was on a level with the previous year. The performance of the large individual passenger car markets in this region was mixed. The United Kingdom registered slight growth and Spain noticeable growth, while Germany and Italy were at the prior-year level and the market volume in France decreased.

In the reporting year, the volume of new registrations for light commercial vehicles in Western Europe was noticeably up year-on-year.

In the Central and Eastern Europe region, there was a significant increase in the volume of the passenger car market in the reporting year. Positive movement was recorded in the number of vehicles sold in the major markets of both Central and Eastern Europe.

In fiscal year 2024, the market volume of light commercial vehicles in Central and Eastern Europe was significantly higher than in the previous year.

Germany

The number of new passenger car registrations in Germany from January to December 2024 was on a level with the previous year. The change in electric vehicle subsidies at the end of 2023 weighed on new registrations of all-electric vehicles, and demand for vehicles with conventional and hybrid drivetrains was unable to offset this effect overall. Production in Germany stagnated at 4.1 million vehicles (−0.0%) in 2024, while passenger car exports rose to 3.2 million units (+2.0%).

The number of light commercial vehicles sold in Germany in the reporting year was noticeably higher than the 2023 figure.

North America

Sales of passenger cars and light commercial vehicles (up to 6.35 tonnes) were up slightly in the North America region in fiscal year 2024. With the availability and affordability of new vehicles improving on average, the volume of the US market was slightly higher than in the previous year. Canada and Mexico both recorded a noticeable improvement year-on-year.

South America

In the South America region, the volume of new vehicle registrations for passenger cars and light commercial vehicles was noticeably higher in the reporting year than for 2023. The number of new registrations in Brazil increased significantly compared with the previous year, while the Argentinian market recorded a noticeable contraction.

Asia-Pacific

In the Asia-Pacific region, the volume of the passenger car market from January to December 2024 was similar to the previous year. The number of new registrations in the Chinese passenger car market was slightly higher than the 2023 figure due to measures including extensive government sales incentives and lower prices. The Indian passenger car market also saw slight growth. In Japan, by contrast, the market declined noticeably and had a dampening effect on growth in the region.

In 2024, the volume of demand for light commercial vehicles in the Asia-Pacific region was slightly below the level for the previous year. Registration volumes in China, the region’s dominant market and the largest market worldwide, tapered off noticeably compared with the period one year earlier.

TRENDS IN THE MARKETS FOR COMMERCIAL VEHICLES

In the markets that are relevant for the Volkswagen Group, demand for mid-sized and heavy trucks with a gross weight of more than six tonnes experienced slightly weaker growth in fiscal year 2024 versus the comparison period. Global truck markets were likewise slightly below the prior-year level.

In the 27 EU states, excluding Malta but including the United Kingdom, Norway and Switzerland (EU27+3), the number of new truck registrations was noticeably down, albeit to differing degrees in the various markets. The significant market recovery seen in 2023 did not continue in the reporting year. New registrations in Germany, the largest market in this region, fell noticeably short of the prior-year level. The United Kingdom saw a slight decline while France remained on a level with the prior-year. Türkiye recorded a significant drop in new registrations. There was a noticeable fall in demand in the South African market. The truck market in North America is divided into weight classes 1 to 8. In the segments relevant for Volkswagen – Class 6 to 8 (8.85 tonnes or heavier) – the level of new registrations was slightly lower than in the previous year. In contrast, in Brazil, the largest market in the South America region, demand for trucks in the reporting year was significantly up year-on-year.

Demand in the bus markets relevant for the Volkswagen Group was on a level with 2023. Demand for buses in the EU27+3 markets was up slightly, with the picture varying from country to country. The school bus segment in the USA and Canada saw a noticeable decline compared with the prior year, while new registrations of buses in Mexico were significantly higher than in the previous year. Brazil reported a noticeable year-on-year growth in demand for buses.

TRENDS IN THE MARKETS FOR POWER ENGINEERING

The markets for power engineering are influenced by varying regional and economic factors. Consequently, the business growth trends of the respective markets develop mostly independently of one another.

In 2024, the marine market increased to a slightly higher level than in the previous year. There was a slight uptrend in demand for merchant ships. In this segment, the markets for LNG tankers, container ships and conventional tankers recorded a positive year-on-year trend, whereas the market for bulk cargo carriers declined. Activity increased in the market for passenger ferries and cruise ships. The special market for government vessels, which is funded by state investments, continued to be active due to the current geopolitical situation. The uncertainty regarding future fuel and emissions regulations persisted in the marine market; however, the trend toward new fuel technologies continued unabated.

There was still reticence in the market for energy generation in fiscal year 2024, particularly in Europe. This was due to the fact that policymakers have not yet completely finalized the strategy and regulations regarding future investments in this area. The current focus on the expansion of renewable energy sources was reflected in corresponding potential in the demand for grid balancing facilities. Such facilities are used to meet additional power requirements if the share of renewables is not sufficient to ensure security of supply. It remains unclear when decarbonized fuels will be available in sufficient volume and at marketable prices. A positive trend was observed in the demand for power-to-hydrogen plants. The engines segment is seeing continuous demand for gas and dual-fuel engines. There is also a clear demand on the market for engines that can be converted for use with future fuels such as hydrogen and green ammonia. Due to the debate surrounding the origin of CO₂ for green e-fuels, restraint can currently be seen with regard to the development of projects for e-methane and e-methanol. Demand for emergency power units (emergency gensets) continued at a stable level in 2024.

There was slightly less movement in the turbomachinery market than in the previous year. Continued high capacity utilization of production plants and good prices for products from the materials and processing industry kept demand for turbo compressors steady again in the reporting year, with unit sales slightly below the prior-year level. Particularly in oil and gas production, demand for turbo compressors was down year-on-year due to the easing of global energy prices. An exception were turbo compressors for gas transport, which saw higher

demand than in the previous year. By contrast, in the decarbonization-driven areas of business, the market expanded considerably due to public funding and the trend towards the electrification of heating. Demand for steam turbines used for power generation for decentralized energy generation plants experienced a significant decline worldwide compared with the prior-year period.

In 2024, the after-sales market for engines in the marine and power plant business was at the same high level as in the previous year.

In the after-sales market for turbomachinery, demand in the reporting year was up on the prior-year level.

TRENDS IN THE MARKETS FOR FINANCIAL SERVICES

There were high levels of demand for automotive financial services in 2024.

In the year under review, the European passenger car market remained at the same level as in the prior year. However, sales of financial services products increased, as a result of which their share in vehicle deliveries exceeded the equivalent figure for 2023 as a percentage. The positive trend in the financing of used vehicles continued once again in 2024. The sale of after sales products such as servicing, maintenance and spare parts agreements likewise continued to expand.

In Germany, the deliveries of new vehicles in the 2024 fiscal year were on a par with the figure for the previous year. However, the number of new contracts in the financial services business increased noticeably, particularly leasing contracts with individual customers. This meant that the penetration level for new vehicles was above expectations and significantly above the prior-year figure. The used car segment remained stable, with a marginally higher number of new contracts than in 2023. The number of new contracts signed for services and insurance also increased, which was a result of the sale of maintenance and servicing products, as well as passenger car and warranty insurance.

In Türkiye, inflation continued to fall on the strength of the government’s continuous fiscal tightening. The trend towards longer maturities in refinancing continued, giving a boost to the credit-based financing business with private and commercial customers. This development also had a positive effect on the insurance business to some degree. By contrast, the leasing-based fleet business remained under pressure.

Vehicle sales in South Africa declined year-on-year in the reporting year. As a result, the number of financed purchases also decreased. The decline was due to domestic political uncertainty, the continuing subdued economic conditions and high energy prices. The economic challenges also led to tightening of lending requirements – a disadvantage for people with lower incomes.

On the whole, the markets for financial services in the North America region developed favorably in 2024 compared with the previous year. In the USA, Canada and Mexico, deliveries, the number of leasing and financing contracts, new vehicle penetration and new contracts for insurance and after-sales products were all up on the prior-year figures.

In the South America region, the market for financial services remained strong. In Brazil, the number of new contracts rose thanks to the range of financial services targeted at specific customer groups, as well as increased deliveries. The number of car subscriptions and fleet management programs entered into also rose. In Argentina, the level of financial services contracts was stable in spite of challenging, though slowly improving macroeconomic conditions.

The Chinese automotive market witnessed a further rise in demand for electrified and used vehicles in the reporting year. In addition, banks were increasingly gaining a foothold in the market with their own products. This, in turn, also affected demand for automotive financial services. In Japan, the financial and insurance market remained relatively stable in the reporting year despite waning vehicle demand and rising interest rates; innovations in the insurance sector provided a source of positive impetus.

The financial services business for heavy commercial vehicles was slightly up on the prior-year level in fiscal year 2024. The long delivery times for commercial vehicles normalized over the course of the year thanks to improvements in supply chains.