The Volkswagen Group's pre-tax profits were down €3.3 billion (£2.75bn) in the first nine months of 2024 - its lowest since the Covid pandemic – driven by difficulties at its Volkswagen brand, where “painful decisions” need to be made.
The group has blamed a weaker industry environment – especially in China, an important market for the brand, where sales are down 10% – high fixed costs (such as amenities and wages) and costs around "significant" reorganisation (€2.2bn), which relates to the closure and potential sale of Audi’s plant in Brussels, Belgium.
As a result, it is expecting 240,000 fewer sales and and a fall in revenue of €2.3bn (£1.9bn) this year compared with 2023, it said today.
“Our nine-month results reflect a challenging market environment and underline the importance of delivering on the performance programmes we have launched across the group,” said COO Arno Antlitz.
The Volkswagen Group’s difficulties have been hugely impacted by its crisis-ridden Volkswagen brand, which reported just a 2% operating margin for the first nine months of 2024. Antlitz said this highlights “the urgent need for significant cost reductions and efficiency gains”.
Cost-cutting plans put forward by the brand’s works council earlier this week suggest that these measures are likely to include the shutdown of three factories, the laying off of tens of thousands of workers and salary cuts for those who remain,
During the group's earnings call with journalists this morning, Antlitz added: "We are facing important and painful decisions that we need to make together and bear together.
"I’m well aware that the cuts we are facing are tough for all of us, and many employees are worried about their future. However, it is our shared responsibility to act for the future of this company and for generations to come.
"We’ve not forgotten how to build great cars, but the costs specifically from our German operations and factories are far from being competitive. This is where things cannot continue as they are now."
In documents published this morning, the group – which includes Skoda, Cupra, Seat, Audi, Porsche, Volkswagen and more – reported 6.5 million cars sales to September, down 300,000 (4%) compared with the first nine months of 2023.
Despite this, its sales revenue is up €2.2bn on last year, but due to high fixed costs, its pre-tax operating income is down €3.3bn (21%) year on year. This has left its operating margins at 5.4%
However, the group has highlighted that new models – such as the VW ID 7 GTX, Audi A6 E-tron, VW Transporter and Skoda Elroq – have been “well received” in Europe, with orders up 9% compared with the first nine months of last year.
Add your comment