Results of Operations

Results of operations of the Group

In the period from January to December 2024, the Volkswagen Group generated sales revenue of €324.7 (322.3) billion and therefore reached the prior-year level, mainly driven by the positive sales revenue performance of the Financial Services Division. 80.9 (81.5)% of the Volkswagen Group’s sales revenue came from outside Germany. Gross profit decreased by €1.5 billion to €59.5 billion. As a consequence, the gross margin declined to 18.3 (18.9)%.

In fiscal year 2024, the Volkswagen Group’s operating result amounted to €19.1 (22.5) billion. The operating return on sales was 5.9 (7.0)%. The lower result was mainly due to a slightly negative effect from mix and pricing trends, as well as to higher depreciation and upfront expenditures for new products. In the reporting year, the Passenger Cars Business Area also incurred restructuring expenses, which were set against the reversal of personnel-related provisions of around €1 billion as a result of the outcome of the collective bargaining at Volkswagen AG. The Power Engineering Business Area incurred expenses in connection with the planned closure of the MGT gas turbine business of MAN Energy Solutions. In the period from January to December 2024, a rise in interest expenses, higher risk costs and foreign exchange losses in connection with the deconsolidation of Volkswagen Bank Rus had an additional adverse impact on the Financial Services Division’s operating result. In the previous year, the fair value measurement of derivatives to which hedge accounting is not applied had reduced the Volkswagen Group’s operating result by €3.2 billion.

The financial result was down on the previous year, at €−2.3 (0.6) billion. The share of the result of equity-accounted investments was lower than in the prior-year period due to the decline in the result of the Chinese joint ventures, amongst other factors. The final winding-down of Argo AI resulted in a gain in the third quarter of 2024. The other financial result was down on the previous year, mainly because of the impairment losses recognized in connection with Northvolt.

SHARE OF SALES REVENUE BY MARKET 2024

in percent

SHARE OF SALES REVENUE BY DIVISION/ BUSINESS AREA 2024

in percent

In fiscal year 2024, Volkswagen Group’s earnings before tax decreased by €6.3 billion to €16.8 billion. The return on sales before tax declined to 5.2 (7.2)%. Income taxes resulted in an expense of €4.4 (5.2) billion, which in turn led to a tax rate of 26.3 (22.7)%. At €12.4 billion, earnings after tax declined by €5.5 billion on the previous year.

Results of operations in the Automotive Division

In the period from January to December 2024, the Automotive Division’s sales revenue of €265.9 (268.2) billion was on a level with the prior-year figure. Sales revenue in the Passenger Cars Business Area was similar to the previous year; in the Commercial Vehicles Business Area it was on a level with the previous year, while it went up noticeably in the Power Engineering Business Area. As our Chinese joint ventures are accounted for using the equity method, the Group’s business performance in the Chinese passenger car market is essentially reflected in the Group’s sales revenue only through deliveries of vehicles and vehicle parts.

Cost of sales was unchanged from the previous year. There was a rise in the research and development costs recognized in profit or loss included in this item, particularly due to higher amortization of capitalized development costs. A decline in the cost of materials driven by lower volumes and the reversal of personnel-related provisions as a result of the outcome of the collective bargaining achieved at Volkswagen AG had a beneficial effect. The research and development ratio (R&D ratio), which is defined as total research and development costs as a share of the Automotive Division’s sales revenue, amounted to 7.9 (8.1)% in the period from January to December 2024, which was down on the prior-year period. The automotive investment ratio, which combines the R&D and capex ratios, amounted to 14.3 (13.5)%. This includes the acquisition of licenses from Rivian, which accounted for 0.5 percentage points.

In fiscal year 2024, there was a slight year-on-year increase in both distribution expenses – driven, among other factors, by higher marketing costs – and administrative expenses; their respective share of sales revenue also went up. The other operating result stood at €−4.1 (−4.1) billion. The Passenger Cars Business Area recognized expenses for restructuring measures in the reporting year. In the previous year, the fair value measurement of derivatives to which hedge accounting is not applied had had an adverse impact.

In the period from January to December 2024, the Automotive Division’s operating result amounted to €15.9 billion, down €2.8 billion on the previous year. A slightly negative effect from mix and pricing trends, higher depreciation and higher upfront expenditures for new products, and expenses for restructuring measures all had an adverse impact, offset by the reversal of personnel-related provisions as a result of the outcome of the collective bargaining achieved at Volkswagen AG in the reporting year. Expenses were incurred in the Power Engineering Business Area in connection with the discontinuation of the new-build business with MGT gas turbines of MAN Energy Solutions. In the previous year, the fair value measurement of derivatives to which hedge accounting is not applied had also reduced the operating result. The operating return on sales decreased to 6.0 (7.0)%. With regard to our equity-accounted Chinese joint ventures, our operating result essentially only considers income from deliveries of vehicles and vehicle parts, as well as license income, as these joint ventures are included in the financial result.

Results of operations in the Financial Services Division

In the period from January to December 2024, the Financial Services Division’s sales revenue amounted to €58.8 billion, up 8.6% on the prior-year figure because of higher volumes. Cost of sales increased, mainly because of very strong growth in interest expenses and a volume-driven rise in depreciation of the residual values of leased vehicles. The resulting gross profit amounted to 8.1 (7.9) billion.

The Financial Services Division’s operating result of €3.1 (3.8) billion was down on the previous year. The decline was mainly the result of higher risk costs and foreign exchange losses realized in connection with the deconsolidation of Volkswagen Bank Rus. The operating return on sales decreased to 5.3 (7.0)%. The return on equity before tax was 6.8 (8.8)%.