Volkswagen Under Pressure: Slow Quarterly Figures and Challenges in the Middle Kingdom
- Volkswagen reports a 42% drop in operating profit in the third quarter.
- In China, Volkswagen is planning the development of new electric vehicles to increase competitiveness.
Eulerpool News·
Volkswagen presented disappointing figures in the third quarter, highlighting the growing pressure on large automobile manufacturers amid stagnating global demand and strong competition from China. While revenue declined by only 0.5%, operating profit dropped significantly by 42% to 2.86 billion euros. Particularly alarming: the operating margin decreased from 6.2% to 3.6%, and worldwide deliveries fell by 8.3% to 2.12 million vehicles. The automotive group, which includes well-known brands such as Audi, Bentley, and Porsche in its portfolio, is caught in a tension between high production costs and decreasing demand. In China, a crucial market for Volkswagen, the joint ventures face growing pressure from domestic competitors like BYD and Li Auto. Arno Antlitz, CFO and COO of the Volkswagen Group, emphasized the challenges and the importance of implementing new performance programs. The urgency of significant cost reductions and efficiency improvements is underscored by the Volkswagen brand's operating margin of only 2% after nine months. Despite the challenges, Volkswagen maintains its revised annual forecast for 2024 but expects a decrease in free cash flow from the previous range of 2.5 to 4.5 billion euros to about 2 billion euros. The revenue expectation has also been slightly lowered to 320 billion euros. To remain competitive in China, Volkswagen plans to develop two new electric vehicles in collaboration with XPeng. Additionally, Audi's premium brand has signed an agreement with the state-owned Chinese company SAIC to develop new electric vehicles. Analyst Horst Schneider from Bank of America sees VW currently forced to accept losses in selling electric vehicles in China, hoping to gain market share with new models in 2026/27.
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