Wolfsburg (Germany) (AFP) – Volkswagen said Tuesday its profits nosedived in 2024 amid high costs and fierce Chinese competition as the German carmaker geared up for another tricky year navigating an industry transition and global trade tensions. At 12.4 billion euros ($13.4 billion) in 2024, net profit for Europe’s biggest automaker fell over 30 percent compared with the previous year, even as overall sales grew slightly to reach 324.7 billion euros.
The 10-brand group said its earnings last year were hit by high costs as it faces a stuttering shift to electric vehicles, weak demand in Europe, and fierce competition from local rivals in key market China. The manufacturer, whose models range from Audi to Seat and Skoda, had a particularly difficult 2024 marked by a long dispute with unions that ended with a deal in December to cut 35,000 jobs in Germany by 2030. The carmaker ultimately decided against closing factories at home for the first time ever, but its problems nevertheless highlighted a broader crisis buffeting Europe’s ailing auto industry as it struggles to keep pace with rapid changes.
As it seeks to plot a way forward, finance chief Arno Antlitz vowed Volkswagen would focus on “consistently reducing costs and increasing profitability.” “We need to build more cars with fewer people,” he added.
– China troubles – Highlighting Volkswagen’s difficulties, its deliveries last year to China — its single biggest national market — fell almost 10 percent, even as they were flat or rose in the rest of the world. The weakness in China was behind an overall 3.5-percent drop in unit sales, with Volkswagen only shifting around nine million vehicles worldwide last year. Antlitz nevertheless said he believed that recovery in China, where VW has been losing market share to local rivals like electric carmaker BYD, might be in sight. “We want to fight back in and start gaining market share in China by 2026 at the latest,” he said.
For 2025, the group expects revenue to grow by up to five percent and is forecasting a profit margin of between 5.5 and 6.5 percent. At the upper end, this would be better than the figure for last year, but still below the seven percent it achieved in 2023. Volkswagen’s shares jumped over three percent in Frankfurt immediately after the results were announced, with analyst Pal Skirta of German bank Metzler saying the “optimistic” outlook had pushed them higher. But in afternoon trade they pulled back and were trading slightly in the red.
– Trump troubles – The carmaker also warned that 2025 could be marked by challenges arising “from an environment characterised by political uncertainty, increasing trade restrictions and geopolitical tensions.” US President Donald Trump has upended global trade by unleashing a series of tariffs and threats targeting US allies and adversaries. Volkswagen CEO Oliver Blume told reporters that he hoped the company’s footprint in the United States — where it employs tens of thousands — could help it make the argument for a “fair compromise” on tariffs levied on Mexico and Canada, where carmakers source parts.
Trump last week hit all imports from Canada and Mexico with tariffs but then granted an exemption to most auto imports after an outcry from US automakers. “The US automotive industry has very strong, deep integration in Canada in particular, but also in Mexico,” he said. “We’re counting on the strong investment footprint we have in the USA, including future plans,” he added. He also welcomed a proposal last week by the European Commission to give carmakers more time to meet tough emissions reductions targets. “People have carried out a reality check. The ramp-up of electromobility has not developed as quickly as was assumed years ago,” he said.
© 2024 AFP
