VW faces lagging demand in Europe
Following slow development in its business in China, Volkswagen is also reportedly struggling with low demand for its electric models in Europe. Orders in Germany are well below the annual target for the brand’s ID models.
Handelsblatt broke the news in Germany with reference to an insider from dealer circles. All battery-electric models of the Volkswagen brand, meaning the ID.3, ID.4, ID.5 and ID. Buzz are affected. A spokesperson for the VW brand confirmed to the business newspaper the company was feeling “a general reluctance to buy electric cars, just like other automakers”.
The insider statements fit the latest information: at the end of June, VW was temporarily reducing the production of electric cars at its plant in Emden. In June, a VW spokesperson told electrive editors that the delivery time for the models of the ID. family is currently two to three months, depending on the respective equipment. “Customers who opt for a preconfigured vehicle may be able to get their car even sooner,” the spokesperson said. Since no increase in production at the MEB plants has been announced, it stands to reason that the shortened delivery time can be explained by lower demand.
In addition, the Handelsblatt report cites some figures from data service provider Marklines: according to them, VW built 97,000 units of its ID. models in Europe between January and May, but sold only 73,000 of them. Tesla came to over 100,000 sales in this period with its Model Y alone.
Add to that the growing competition: something like the MG4, a direct competitor to VW’s ID.3, was registered about 23,100 times in Europe from January to May. The VW ID.3 came to just under 28,000 registrations in the same period. And according to Marklines, the ID.3 was built 36,500 times. And even with the hopeful ID. Buzz, the plans will probably not be fulfilled; according to the report, the “meager demand” is likely to “cause pain” for the Group’s top executives: In the first five months, 9,000 units were probably built in Hanover, of which 5,577 were registered in Europe. The plan was to build around 44,000 IDs for the year as a whole. Buzz, which Volkswagen is likely to fall well short of given the situation from January to May.
Several dealers interviewed by the Handelsblatt had explained the restraint of private customers primarily with the reduced electric subsidy, high inflation and still comparatively high prices for VW electric cars. However, private customers are not only holding back on e-cars; according to dealer circles, there are also “clear declines in orders” for combustion models.
When Volkswagen reported its delivery figures for 2022 in January, the brand still said it had around 640,000 customer orders in Europe across all drive types. According to the Handelsblatt report, incoming orders now stand at “around 650,000 vehicles.” “However, existing orders are apparently melting away faster than planned because too few new orders are coming in – especially from the battery-powered vehicle segment,” the report says. In addition, executives from affected plants are quoted as saying that demand for some e-models has fallen to “zero” in some cases. Accordingly, dealers estimate that inventory could be worked off by the fall if no new orders come in.
“Largely on schedule,” on the other hand, is only the key account business. Fleet sales can therefore also explain the 16 percent increase in registrations for the VW brand in the first half of 2023.