Volkswagen’s Third Quarter Profit Takes a Hit
German automaker Volkswagen has reported a significant drop in operating profit for the third quarter of 2024. The company’s operating profit fell by 42% to 2.86 billion euros ($3.1 billion), while sales revenues slipped by 0.5% year on year to around 78.5 billion euros.
Vehicle Sales Decline
Volkswagen’s vehicle sales also took a hit, falling by 8.3% in the third quarter compared to the same time period a year earlier. The company’s net liquidity across the group stood at negative 160.6 billion euros at the end of September 2024, a decline from negative 147.4 billion euros at the end of 2023.
Challenging Market Environment
According to Arno Antlitz, chief financial officer and chief operating officer at Volkswagen Group, the company’s performance reflected a “challenging market environment”. The results were also impacted by higher fixed costs and restructuring efforts.
Restructuring Efforts
Volkswagen has been undergoing significant restructuring efforts in recent months, including cutting its 2024 annual outlook for the second time in just a few months. The company has also warned of potential plant closures in Germany and scrapped labor agreements with local workers.
Pay Cuts and Layoffs
The Volkswagen works council has announced that the company’s management is planning widespread pay cuts and layoffs, as well as the closure or size reduction of all of its German plants. In response, Volkswagen has reiterated the need for restructuring and cost cuts.
Investing in the Future
Volkswagen’s chief negotiator Arne Meiswinkel has stated that the company needs to lower costs and increase its efficiency in order to invest in its future. The company is set to present plans for work cost cuts during a round of negotiations about the labor agreements.
A Difficult Road Ahead
The situation for Volkswagen is becoming increasingly serious, with the company facing significant challenges in the auto industry in Europe and especially in Germany. The latest figures from both the company and its competitors have raised concerns about the future of the industry.
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