Profits, sales plunge at Volkswagen

30th Oct 2024 08:14

(Sharecast News) - Profits tumbled at Volkswagen, the German manufacturer confirmed on Wednesday, dragged down by challenging market conditions and higher costs.

Europe's largest carmaker, which is seeking to axe jobs, said sales revenues in the third quarter eased 0.5% to €78.5bn, while the operating result slid 42% to €2.9bn. Net profits plunged 60% to €1.57bn.

Vehicle sales were down sharply, off 8% at 2.1m. As well as its flagship Volkswagen brand, the company also owns Audi, Skoda and Porsche.

In the first nine months, group sales revenue ticked up 0.9% to €237.3bn. But the operating result slumped 21% to €12.9bn, while vehicle sales fell 4% to 6.5m.

Arno Antlitz, chief operating officer, said: "Our nine-month results reflect a challenging market environment and underline the importance of delivering on the performance programs we have launched across the group.

"Volkswagen brand reported an operating margin of only 2% after nine months. This highlights the urgent need for significant cost reductions and efficiency gains."

Looking to the full year, Volkswagen now expects to deliver 9m vehicles in 2024, down on last year's 9.24m.

Group sales revenue was forecast to come in at €320bn - compared to 2023's €322.2bn - and operating profits at about €18bn.

Volkswagen has been hit by rising costs and softening demand, especially in China, a core market for Europe's car manufacturers.

In response, it wants to bolster earnings by cutting jobs and potentially closing plants. It also wants to end a decades-old agreement to protect jobs at German factories in July 2025, four years early.

Unions have reacted angrily, however, and have warned strikes could be possible from 1 December if the two sides fail to reach an agreement. They are calling for a 7% pay rise for employees.

VW currently employs around 130,000 people in Germany.