A Volkswagen Golf GTI is parked in the parking lot of the brand tower at the Volkswagen factory in Wolfsburg, Germany.
Julian Stratenschulte | Image Alliance | Getty Images
Volkswagen On Friday, the company cut its annual forecast for the second time in less than three months, saying its passenger car division's results fell short of expectations as pressure continues to mount on Europe's top automaker.
The German auto giant has recently lowered its forecasts. Mercedes-Benz and BMW Both companies earlier this month cut their annual forecasts due to weak demand in China, the world's largest auto market.
Two days ago, Volkswagen launched important negotiations with Germany's most powerful union IG Metall on wages and employment protection issues. historical conflict This could lead to the closure of a German factory for the first time in the carmaker's history.
Volkswagen currently forecasts profit margins of about 5.6% in 2024, down from the previous 6.5-7% and below LSEG's forecast of 6.5%, while sales are expected to fall 0.7% to 320 billion euros (356.7 billion Dollar) .
Volkswagen said it was downgrading its outlook “in light of challenging market conditions and developments that fell short of initial expectations, especially for the Volkswagen Passenger Cars, Volkswagen Commercial Vehicles and Technical Parts brands.”
The German automaker, which owns majority stakes in Porsche and truck giant Traton, also lowered its global delivery forecast to around 9 million vehicles, down from its previous forecast of 9.24 million units in 2023, a rise of up to 3%.
Porsche, the holding company of the Porsche and Piech families that owns most of Volkswagen's voting rights and is the automaker's single largest shareholder, also downgraded its own outlook following Volkswagen's downgrade.
Decline in demand
Frankfurt-listed shares of Volkswagen and Porsche fell 0.7% and 1.6% respectively.
Global economic weakness has hit Germany's export-led economy at a time when severe shortages of skilled labor, high energy prices and cheaper Asian rivals have created bigger problems for local industrial giants such as ThyssenKrupp and BASF. pressure.
There are also problems that arise be challenged Germany’s proven model of consensus-building relations with Germany strong unionsViewed as an advantage when demand grows, it becomes something of a liability when costs grow beyond salary expectations.
The fate of the auto industry and pressure from China is a global issue that's taking a toll on Europe's automotive elite struggling Keep the factory running at full capacity.
During the U.S. presidential election, Republican candidate Donald Trump suggested that China could dominate future auto production, while the Democratic Biden administration accused China of flooding global markets with overcapacity and proposed a ban on nearly all Chinese cars. The rules start with entering the US market.
Volkswagen, which is due to announce third-quarter results on October 30, said it now expects net cash flow from its automotive division to be about 2 billion euros, down from the previous range of 2.5 billion to 4.5 billion euros.
(1 USD = 0.8971 Euro)