Volkswagen reported a 42% drop in operating profit in the third quarter. Operating profit fell to 2.86 billion euros, while third-quarter sales revenue fell 0.5 percent year-on-year to about 78.5 billion euros.
Vehicle sales fell 8.3% in the third quarter of 2024 compared to the same period a year earlier, while operating margin was just 3.6%, the lowest in at least four years.
Net liquidity across the Volkswagen Group stood at 160.6 billion euros at the end of September 2024, the company said. The company’s net liquidity stood at €147.4 billion at the end of 2023.
Volkswagen said on Wednesday that its results in the first three quarters of the year were affected by higher fixed costs and restructuring efforts. Operating profit between January and September this year was 21% lower year-on-year.
The results bolster Volkswagen management’s case for drastic measures in Germany, where labor leaders are resisting the closure of at least three plants and the axing of thousands of jobs. The company is also looking to cut wages for around 140,000 workers by 10%, all of which will add to the woes of Europe’s biggest economy.
The core VW brand – where much of those cuts will fall – earned just a 2% operating margin in the first nine months of the year, Volkswagen Chief Financial Officer Arno Antlitz said on Wednesday.
VW has never really had high margins over the years, but this is a different era, VW isn’t making the money it needs to spend on all the new products. This highlights the urgent need for significant cost reductions and efficiency gains,
said Antlitz, who is also chief operating officer.
Volkswagen announced the results hours before the start of a second round of restructuring talks with labor leaders in Wolfsburg, where the company is headquartered, as the automaker faces the risk of strikes. Its preferred shares have fallen 20% this year, ranking as the worst-performing stock on Germany’s DAX benchmark.
Falling sales in China and increasingly tough competition in Europe, which has yet to return to pre-pandemic demand levels, helped Volkswagen issue two profit warnings in the second half of this year. VW’s namesake brand has long struggled with poor returns, and recovery efforts have been hampered by failed electric vehicle launches.
Chinese automakers are also encroaching on the performance and premium car territories of Porsche and Audi, posing a threat to both Volkswagen-owned brands and German counterparts Mercedes-Benz Group AG and BMW AG.
According to analysts’ calculations, the company could save 2.5 billion euros a year, or about 1,900 euros for every car it sells in Europe, if it closed factories. The factories in Emdem, Hanover and Osnabrück are the most underperforming.
I say it clearly that Volkswagen has opened a Pandora’s Box, by ending job security and other collective agreements, it has jeopardized the trust of workers and now Volkswagen is called upon to restore that trust,
he said to Reuters Thorsten Groeger, union negotiator IG Metall.
Antlitz reiterated that VW needs to save more than 10 billion euros in costs to remain competitive.
Strikes and reactions
Thousands of German auto workers have launched nationwide strikes to press for higher wages, affecting the likes of Porsche, BMW and Mercedes.
Tuesday’s strikes were orchestrated by the powerful IG Metall union, which also called a strike during the night shift at Volkswagen’s plant in the city of Osnabruck, where workers fear the plant could be closed. At the Porsche factory in Stuttgart, 500 workers walked out during the night shift and then about 4,000 workers went on strike during the morning shift to join the demonstration.
The union is demanding wage increases of 7% compared to the 3.6% increase over a 27-month period offered by employers’ associations. Companies say the demands are unrealistic.
Source: www.autoblog.gr
