A Volkswagen The numbers don’t add up. In fact, they do, but they are not the numbers the company wants. What does that mean? The German group is making profits, but they are not big enough to satisfy its board of directors.
For a company of this size, not having enough profits is similar to having losses, which is why the CEO of Volkswagen, Oliver Blumewho is simultaneously CEO of Porsche, has said they need to make further cuts to try to improve their margins.
More cuts for the second half of the year
The last few years have not been the best for the Volkswagen GroupBeyond Dieselgate, the German company has other problems, such as selling fewer electric cars than it expected, which is making it consider closing factories, or that it is not finding the right key when it comes to developing the software for its electric cars.
Added to this is the unstoppable advance of Chinese cars; as with other Western manufacturers, this is something that Volkswagen is increasingly noticing in its sales and the future is not very promising in this regard because China wants much more.
Despite everything, the Volkswagen Group is doing things well enough to make a profit and is also taking the necessary steps to do things better. One of them is the one it took a few weeks ago, when it announced a 5 billion euro investment in Rivian to gain access to the American brand’s technology, or the partnership with the Chinese company XPeng. In addition, Volkswagen is renewing its entire range, including its electric cars.
Another of the German company’s measures is to carry out cuts to clean up your accounts This means reducing its production capacity by 10% across Europe. It is also implementing other measures, such as encouraging early retirement, although this will not have an immediate effect on its accounts.
The cuts are part of a savings campaign of 10 billion euros that was announced last December and for 2024 alone, Volkswagen is expected to save up to 4 billion euros.
Thanks to all these initiatives, Volkswagen has recorded a profit before interest and taxes of 5.46 billion euros in the second quarter of 2024, according to ReutersThe problem is that it is not enough, in fact, in the same period of the previous year it achieved a profit of 5.6 billion euros.
To remedy this situation, which the company considers unfavourable, Volkswagen has decided to make further cuts, so that the investment expenditure planned for 2024-2028 was 180 billion euros and now will be reduced by around 10 billion eurosrising to around €165 billion by 2025-2029.
“It’s about costs, costs and costs,” said Volkswagen’s chief executive, Oliver Blume. For his part, the group’s chief financial officer, Arno Antilitz, said, as reported by Reuters, that “a return of 6.3% after six months is too low. We will have to make significant cost-cutting efforts in the second half of the year and beyond to achieve our objectives.”
Image | Volkswagen
Source: www.motorpasion.com
