The tense market situation leaves deep scars on the Wolfsburg car manufacturer. Instead of a planned increase in deliveries by up to three percent compared to the previous year, Volkswagen now expects sales of around nine million vehicles. Originally, the company had aimed for 9.5 million vehicles. Accordingly, the revenue forecast is also lower: Group revenue is expected to be around 320 billion euros in 2024 – just below the previous year's level of 322 billion euros.
The Volkswagen share reacted after hours on the trading platform Tradegate with a price drop of 2.9 percent. The parent holding company, Porsche SE, which is significantly dependent on the results from Wolfsburg, also revised its profit forecast downwards. Instead of 3.5 to 5.5 billion euros in post-tax profit, the holding company now expects a result of 2.4 to 4.4 billion euros. The disappointing business figures from Wolfsburg are thus also putting pressure on the Porsche and Piëch owner families.
The profitability of the group will also be weaker than expected. Volkswagen anticipates an operating profit of 18 billion euros, which corresponds to an operating margin of around 5.6 percent. This falls significantly behind the previously targeted range of 6.5 to 7.0 percent. As early as July, Volkswagen had lowered its expectations, as the costs for the controversial Audi plant in Brussels were weighing on the results.
The causes of the weak numbers are manifold. In addition to the general economic weakness, the automotive industry is suffering from the collapse of the Chinese market, which for years was considered a growth driver. Volkswagen's core passenger car brand, in particular, has lost ground in China, losing its market leadership to the local manufacturer BYD, which is increasingly setting the tone with affordable electric vehicles. Other German premium manufacturers such as Mercedes-Benz, BMW, and Porsche are also struggling with declining sales figures, as wealthy Chinese customers are investing more cautiously due to the ongoing real estate crisis.
Moreover, the sales of electric vehicles in Europe are stalling, putting further pressure on automakers. The billion-dollar investments in fleet electrification have so far not brought the expected breakthrough. The result: Margins are shrinking, and manufacturers are increasingly under cost pressure.
Above all, the core brand VW passenger cars is therefore planning massive cost savings. A few weeks ago, Volkswagen announced the end of decades-long job security. Redundancies and possible plant closures are no longer taboo. The company is facing profound restructuring to ensure profitability in a challenging market environment.
The company's own financial services division, which has traditionally been a stabilizing factor in times of crisis, was also unable to compensate for the weak results. The declining demand for leasing and financing transactions, along with a challenging interest rate environment, further burden the division.
With this new forecast adjustment, Volkswagen joins the list of beleaguered automakers struggling with changing conditions and the challenges of transformation. The economic environment remains tense, and the industry faces a difficult year-end sprint.
