VW profits collapse by more than 60 percent in the third quarter

High costs and significantly weak sales in China have placed a heavy burden on Volkswagen’s quarterly figures. Profit fell by 63.7 percent and amounted to almost 1.58 billion euros in the third quarter, as the group in Wolfsburg announced on Wednesday. The car manufacturer’s sales fell slightly by 0.5 percent to just under 78.48 billion euros.

VW spoke of a “challenging market environment” in the first nine months of the year and referred, among other things, to higher fixed costs, provisions for restructuring and costs for the introduction of new products. After nine months, the return on investment for the ailing VW core brand is only two percent. Overall, this shows the “urgent need for significant cost reductions and efficiency improvements,” explained Group CFO Arno Antlitz.

Although there was growth in vehicle sales in North America (plus four percent) and South America (plus 16 percent) in the first nine months of the year, there was a decline of twelve percent in China and one percent in Western Europe.

Extensive savings plans are being discussed at the ailing car manufacturer; according to the works council and media reports, the company is planning to close three plants, cut tens of thousands of jobs and massive salary cuts. Like many European manufacturers, VW is struggling with low sales, especially for electric cars, increasingly tough competition from China and at the same time high costs in its home country. IG Metall’s second round of collective bargaining at VW also starts on Wednesday. The fronts have hardened.

Meanwhile, Lower Saxony’s Economics Minister Olaf Lies (SPD) demanded that the ailing car manufacturer’s board come up with a plan on how to get out of the misery without compulsory redundancies and site closures. It is now the task of the board to develop concepts on how to maintain the plants and ensure capacity utilization, said Lies on “Deutschlandfunk”. The state of Lower Saxony, which has a stake in Volkswagen, rejects plant closures.