Volkswagen’s ongoing crisis is now clearly reflected in the company’s financial results. Last quarter, profits plummeted by 64 %, reaching only 2,97 billion euros, with profit margins sharply declining to just 3.6% .
One major factor behind this downturn is restructuring within the Volkswagen and Audi divisions. Despite VW Group issuing two profit warnings, the results were still worse than many analysts had anticipated. To reach the projected annual profit of 18 billion euros, Volkswagen will need to rebound in the final quarter. One bright spot in the report was a 9 % increase in new orders across Europe.
The primary cause of the profit collapse is Volkswagen’s steep decline in sales within the previously profitable Chinese market. To cope with these losses, Volkswagen is now forced into aggressive cost-cutting measures, which will reportedly include shutting down three car plants in Germany, marking the most significant cost-reduction move in Volkswagen’s 87-year history.
The troubling news pushed Volkswagen’s already struggling stock down by over 3 % in early Frankfurt trading. However, the stock rebounded when the market opened, rising by 2 %. Later today, company leadership is set to begin critical wage negotiations with labor unions, though the two sides remain far apart. The union is demanding a 7 % wage increase, while management is pushing for at least a 10 % pay cut.
