By Frank Johannsen, dpa.
German car manufacturer Volkswagen announced on Thursday that it is extending the timeline for achieving its planned cost reductions for its core brand.
The target of a 6.5% return on sales, originally set for 2026, will now be reached by 2029, according to chief financial officer David Powels, who presented the brand’s financial results for 2024.
“The target remains in place,” Powels stated, adding that the company is confident it can meet this revised forecast.
Powels attributed the delay to a significantly more challenging market environment, with declining sales, increased competition – particularly in China – and shifting market conditions in the United Stated.
However, with the measures agreed upon with trade unions just before Christmas, VW Passenger Cars now has a solid foundation for the future, and implementation of the plan is under way, he said.
In December, Volkswagen and the trade union reached an agreement on a restructuring programme for the struggling core brand. As part of the plan, 35,000 jobs will be cut in Germany by 2030, roughly one in four positions.
In exchange, the company has pledged to avoid plant closures and compulsory redundancies.
Last year, the core brand’s operating return on sales was just 2.9%, a significant drop from the 4.1% achieved in 2023. This means only 2.9 cents of profit were generated for every €1 of revenue.
While sales and revenue outside of China saw slight growth, operating profit dropped by more than 25%, from €3.5 billion ($3.8 billion) to €2.6 billion.
VW subsidiary Škoda increases profits by almost a third
Meanwhile, Czech car manufacturer Škoda increased its profit by almost a third last year, consolidating its position as the VW Group’s flagship brand in the mass segment.
Operating profit for 2024 reached €2.3 billion, a 30% increase compared to the previous year.
Škoda chief executive Klaus Zellmer said during a meeting with journalists in Prague that it was a solid result for a challenging environment.
Source: dpa.com