Europe's largest carmaker, Volkswagen, has announced a 64% plunge in profits for the third quarter. Net profit fell to €1.57bn, down from €4.34bn a year earlier.
The downturn has driven Volkswagen to implement sweeping measures. The company has asked its workers to take a 10% pay cut. It plans to close its Audi Q8 e-tron plant in Brussels by February 2025, affecting roughly 3,000 workers. And it is negotiating with unions regarding closures of up to three factories in Germany, potentially affecting over 10,000 workers. This would mark the first domestic closures in the company's 87-year history.
The IG Metall union has responded with resistance, raising the possibility of strikes if plant closures proceed without additional talks.
The automaker faces significant challenges from Chinese EV manufacturers, who are rapidly gaining market share in Europe with cost-effective models. But a number of other factors have played into the revenue decline, including restructuring expenses and investment requirements to meet EU regulations regarding EVs. In addition, Germany’s EV subsidies for consumers, previously a significant driver of EV adoption, have been sharply scaled back since January, with further cuts planned.
Volkswagen's Western European sales dipped 1%, while Chinese sales fell 12% for the year through September.
Arno Antlitz, Volkswagen’s CFO, stressed that the company’s thin 2% operating margin in its core VW brand underscores the urgency of “significant cost reductions and efficiency gains.”
While German officials, including Chancellor Olaf Scholz, have refrained from committing to financial aid, they have stressed close monitoring and ongoing dialogue with Volkswagen’s management and unions.
