Volkswagen braces for big cuts amid profit plunge and plant woes
During the conference held on October 30, Chief Financial Officer Arno Antlitz shared some troubling news.
4:13 PM EDT, October 30, 2024
It has been known for some time that Volkswagen is grappling with financial issues. However, until now, the company’s management had refrained from making radical statements about the future. That has changed, as Chief Financial Officer Arno Antlitz is directly addressing the urgent need to cut costs.
The results presented at the October 30 conference are not encouraging. According to official data for the third quarter of 2024, Volkswagen's operating profit fell by 42% to $3.01 billion, with revenues of $82.62 billion. The operating margin decreased to 3.6%.
The decline is due to weaker sales results, rising wages, and increased operating and investment costs. Volkswagen representatives stated that these results confirm the need for drastic cuts in Germany, where union leaders oppose the potential closure of three plants and a 10% salary reduction.
"This underscores the urgent need for significant cost reductions and increased efficiency," Antlitz noted, adding that the company had spent as much as $5.15 billion on investments in electromobility, which reduced profits. He also stated that he is confident about reaching an agreement with the employees but cannot rule out strikes.
Unfortunately, given the current conditions, cuts are the only path to relative stability. There is no hope for a significant increase in sales. According to forecasts, in 2024 the Volkswagen Group will sell approximately 9 million cars globally—250,000 fewer than in 2023.
