Automotive brand braces for deep cuts amid profit slump
During the conference held on October 30, Chief Financial Officer Arno Antlitz shared some troubling news.
It has been known for some time that Volkswagen is struggling with financial issues. However, until now, the company's management had avoided making drastic statements about the future. That has now changed—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 $4.3 billion CAD with revenues of $118 billion CAD. The operating margin decreased to 3.6%.
The decline is due not only to weaker sales results but also rising wages, operating costs, and investment expenses. Volkswagen representatives stated that the 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 highlights the urgent need for significant cost reductions and efficiency gains," Antlitz stated, adding that the company spent as much as $7.4 billion CAD on investments in electromobility, which affected profits. He also mentioned being confident about reaching an agreement with the employees but could not rule out the possibility of strikes.
Unfortunately, under the current conditions, cuts seem to be the only path to relative stability. There is no hope for an increase in sales. According to forecasts, in 2024 the Volkswagen Group is expected to sell approximately 9 million vehicles globally—250,000 fewer than in 2023.
