Volkswagen reported a 42% decline in its third-quarter operating profit, primarily due to weak performance in its core passenger car division and high costs associated with model updates, Reuters reports.
Volkswagen’s Finance Chief Arno Antlitz emphasized the need for cost-cutting and efficiency improvements after the operating return on sales for the core unit fell to just 2%. The automaker faces ongoing issues, including complex governance, misguided electric vehicle investments, decreasing revenues in China, and bureaucratic hurdles in Germany. Despite these challenges, there was a slight increase in order intake in Western Europe from July to September, providing some optimism for Q4.
Volkswagen is also negotiating with Germany’s powerful IG Metall union over a proposed overhaul, with plans to close three factories, laying off tens of thousands of staff, and reducing wages by 10%. Meanwhile, the union has demanded a 7% pay increase and threatened strikes if their demands are not met.
Volkswagen has downgraded its annual outlook twice this quarter, similar to competitors BMW and Mercedes-Benz. Earnings before interest and taxes (EBIT) for the quarter reached €2.86 billion, aligning with expectations. VW shares fell 1.8% in early trading, with the stock down about 20% this year.
