Volkswagen deliveries suffer biggest drop since 2022 on China slump

By Amir Orusov

July 10 (Reuters) - Volkswagen reported an 8.6% fall in global vehicle deliveries in the second quarter on Friday, the steepest quarterly decline in four years, as a sharp downturn in China outweighed increases in North America and Europe.

Deliveries, a closely watched proxy for sales, fell to 2.077 million vehicles in the quarter.

"The situation in China remains challenging, where we were unable to escape a significant total market decline of around 20 percent," Marco Schubert, a member of Volkswagen's extended executive committee for sales, said in a statement.

The drop in deliveries, the largest since a 22.4% plunge in the second quarter of 2022, highlights the challenges facing Europe's largest automaker, a day after labour representatives blocked a sweeping restructuring plan from CEO Oliver Blume.

Deliveries in China, Volkswagen's largest market, tumbled 36.6% in the quarter. By contrast, they rose 7.7% in North America, 1.8% in Western Europe and 6.7% in Central and Eastern Europe, the automaker said in a statement.

The decline in China was Volkswagen's steepest quarterly drop there since the fourth quarter of 2021, a spokesperson said.

"Deliveries in China are disappointing as VW underperforms an already weak market," Metzler analyst Daniel Schwarz said.

Volkswagen expects its electrification push in China to gather pace later this year as it rolls out locally developed models under its "In China, for China" strategy. More than 20 new energy vehicle models are due to be launched in China this year, the spokesperson said.

The group remains under pressure from Chinese rivals, however.

"VW still heavily leans on ICE (internal combustion engine) sales in China and faced sales in decline for several years now, but competing in the EV market which is now the largest fraction of sales is very tough," said Rico Luman, senior economist at ING Research.

Volkswagen is the latest German automaker to report weaker sales in China after Mercedes-Benz, BMW and Porsche posted lower deliveries.

(Reporting by Amir Orusov. Editing by Linda Pasquini and Mark Potter)