Friday, April 4, 2025

Bilgiant's profits have collapsed in the middle of a huge crisis

The crisis at Volkswagen seems to continue unabated. Most recently, the accounting figures for the third quarter show that the profit has collapsed by 67 percent.

Volkswagen's accounts for the third quarter reveal a deep crisis in the German car giant. The profit has fallen by 64 percent to DKK 24.5 billion compared to the same period last year.

The fall is far greater than expected, and the group's operating margin has been reduced to just 3.6 percent. This appears from a press release from Volkswagen itself.

One of the main reasons for the drastic drop in profits is the weakened performance in the Chinese market, which has previously been one of Volkswagen's most profitable regions.

Sales have fallen significantly, and the group now sees itself as having to implement extensive savings. According to the trade union IG Metall, this will mean, among other things, the closure of three car factories in Germany. A move that is described by many as the biggest saving exercise in the entire 87-year history of Volkswagen.

In addition to the problems in China, the VAG group itself is experiencing challenges with restructuring at both Volkswagen and Audi.

READ ALSO: Audi closes car factory – over 3,600 lose their jobs

The group has been forced to lower its expectations for the full-year profit twice, and it is now expected to land at DKK 133 billion. To achieve this goal, Volkswagen must make a significant improvement in the last quarter of the year.

The news of the disappointing accounts sent Volkswagen shares down by more than three percent when the Frankfurt stock exchange opened on Wednesday morning. However, the stock later stabilized and rose by two percent.

Volkswagen faces major challenges in the coming time. The group must deal with the failing sales in China, carry out extensive savings and negotiate new wage agreements with the unions.

The negotiations are expected to be difficult, as the union demands a wage increase of seven percent, while the management wants a wage reduction of at least 10 percent.

CFO Arno Antlitz recognizes the challenges facing Volkswagen and emphasizes the need for cost reductions and efficiency improvements.

However, Antlitz highlights an increasing number of orders in Western Europe as a positive sign. Just as he can find something positive in the brand's model program.

Earlier this year, the same financial director gave Volkswagen two – at most three – years to rectify the debt crisis the brand is also in the middle of. Read more about it here .

Read more exciting news from and about the world of motorsport right here!

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