VW posts massive loss
The Volkswagen Group has sunk deeper into the red, emphasising the scale of the challenges it faces as it embarks on major restructuring.
The company has reported an operating loss of €5.9 billion – or around NZ$11.71b – for the third quarter. Analysts had forecast a €2.6b loss versus a €1.3b loss a year earlier.
The quarterly deficit was the company’s largest since the fourth quarter of 2015 when the carmaker booked major one-off charges related to its diesel emissions-cheating scandal. Third-quarter revenue fell six per cent to €75.3b, a steeper decline than analysts had expected.
Chief financial officer Arno Antlitz says the loss was driven by special items totalling about €8b. “But even before these special items, our operating return on sales after nine months is just 3.8 per cent. That is not enough in the long term.”
The VW Group is targeting an operating profit margin of between eight and 10 per cent by 2030 under its restructuring programme. Antlitz says it now needs to accelerate measures already planned, including reducing model complexity, lowering vehicle and overhead costs, and making factories more efficient.
Chief executive Oliver Blume, pictured, plans to eliminate 10,000 jobs group-wide, which includes the Audi and Porsche brands. Up to four plants in Germany could be closed.
The VW Group warned on September 18 of €10b in one-time charges and reductions of one per cent in its 2026 operating margin forecast – down from previous guidance of four to 5.5 per cent. These included a €6b write-down of its 75 per cent stake in Porsche, reflecting weaker expectations for the luxury brand.
The company’s Chinese joint ventures posted an operating loss of €113m in the first nine months compared with a €744m profit a year ago. The reversal shows how one of the group’s most important sources of earnings has turned into a major drag as local competitors seize market share.
The speed of the decline in China is depriving the company of funds to invest in future products and technology. The VW Group is trying to strengthen its position elsewhere. Audi has outlined plans to build its first factory in the US after sales there slumped, partly because of steep tariffs.
