Volkswagen Group recorded its worst quarterly results in over a decade in the third quarter of this year. The company announced that it experienced an operating loss of 5.86 billion euros (approximately 6.53 billion dollars) during the months of July, August, and September. One-time costs, particularly the decrease in the value of its investment in Porsche, account for a significant portion of these losses.
Competitive challenges and declining demand
This automaker, which is considered the second-largest car manufacturer in the world, is facing increased competition and declining demand in its main market, China. Volkswagen is implementing a major restructuring and downsizing plan to prevent a reduction in its profit margins. The company's CFO, Arno Antlitz, stated in a video statement that these difficulties highlight the necessity of this process. He said, "The nine-month results show that we cannot afford to lose time. We must act quickly and decisively."
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Job reduction plan and increased profit margins
According to executive plans, around 100,000 jobs in the Volkswagen Group, which includes the Audi and Porsche brands, are expected to be reduced through a combination of layoffs and not replacing retiring employees. This action is taken due to increased competition from Chinese manufacturers, declining revenues in China, and changes in U.S. automotive tariffs under President Donald Trump. Up to four factories in Germany may be closed as part of this plan, which has faced significant union resistance and could lead to strikes next year.
Antlitz stated that the figures indicate the necessity of these plans and that the company needs to increase its profit margin by 2030. He also added that the operational return based on sales in the first nine months of the year was only 3.8 percent before accounting for the value reductions. He said, "This is not enough in the long term."
The Volkswagen Group aims to return its operating profit margin to between 8 and 10 percent by 2030. This year, amid one-time costs now approaching around 10 billion euros, it predicts that its profit margin will not exceed 1 percent, compared to previous forecasts of around 5 percent.
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