At Volkswagen, the business prospects remain cloudy. For the second time in a short space of time, the group is lowering its targets – and is thus following the industry trend.
The ailing Volkswagen Group is coming under increasing pressure. For the second time in less than three months, the group has to cut its forecast because VW will not sell as many cars as hoped this year. According to the information, things are going worse than expected, especially for the already very strained core brand VW Passenger Cars, but light commercial vehicles and the company’s own supplier division are also weakening.
Instead of an increase in deliveries of up to 3 percent compared to the previous year’s figure of 9.2 million vehicles, the Wolfsburg-based company is now only expecting around 9 million sales, as they announced after the stock market closed. The previously targeted increase in sales of up to 5 percent above the 322 billion euros generated last year is also no longer applicable – now there will only be 320 billion euros in sales.
Things also look bleak in the rest of the industry
Volkswagen is in a serious crisis and recently announced drastic austerity measures. At the core brand, VW had lost the employment security that had existed for decades, and operational layoffs and plant closures were up for debate. How many jobs will be affected is still unclear. Recently, Mercedes-Benz, BMW and the VW sports car subsidiary Porsche also had to reduce their expectations for the financial year. The suppliers often have it even worse.
CEO Oliver Blume also now expects profitability to be weaker: He estimates the operating result at 18 billion euros and thus an operating profit margin of around 5.6 percent. Most recently, the company had assumed a return on sales of 6.5 to 7.0 percent. VW had already lowered its earnings forecast in July due to expected costs for the Audi factory in Brussels, which was in jeopardy. The Volkswagen preferred shares listed in the Dax lost 2.9 percent to the Xetra closing level on the Tradegate trading platform.
The industry’s problems are wide-ranging: many car manufacturers are affected by the weakness in the former growth market of China. VW Passenger Cars lost its market leadership in the world’s most important car market last year after decades because Chinese electric car manufacturers such as the new top dog BYD declared war on the Germans with cheap electric cars. Mercedes, BMW and the sports car manufacturer Porsche are suffering from the fact that wealthy Chinese are currently struggling with the real estate crisis in the country and are therefore paying more attention to money. In Europe, the electric car business is currently going badly, in which car manufacturers have invested billions.
Source: Stern
