Key facts
- Volkswagen's operating profit fell 9.5% to €3.5bn in the second quarter.
- The company has lowered its revenue forecast, now expecting a potential 3% decrease.
- Sales in China have dropped over 31% in the first half of the year.
- Volkswagen is considering significant job cuts, potentially up to 100,000 positions.
- Plans include reducing the company's model lineup by up to 50%.
Volkswagen is implementing aggressive cost-cutting measures, including potential job reductions and a significant cut to its model lineup, as it grapples with a sharp decline in profits and revenue forecasts. The German automaker's struggles are largely attributed to a sales slump in the highly competitive Chinese market and the increasing export of affordable electric vehicles from Chinese competitors into Europe.
In the second quarter, Volkswagen's operating profit fell by 9.5% to €3.5bn, missing analyst expectations. The company has revised its revenue forecast, now anticipating a potential 3% decrease for the year, a reversal from its earlier projection of a 3% increase. Globally, Volkswagen delivered 6.3% fewer cars in the first half of the year, with sales in China plummeting by over 31% during the same period. This downturn puts pressure on CEO Oliver Blume's restructuring plans, which aim to make the company more innovative, faster, and robust.
Blume's proposed restructuring includes potentially axing up to 100,000 jobs, primarily in administrative roles, and reducing the number of models offered across Volkswagen's brands, which include Audi, Bentley, Skoda, Seat, Porsche, and Cupra. The company employs over 650,000 people worldwide. The increasing export of Chinese electric vehicles is also creating competitive pressure in European markets, prompting Blume to state that such restructuring is essential for the company's future competitiveness.