German auto giant faces tough choices as profits take unexpected nosedive
Volkswagen struggles with major profit decrease as Chinese market share drops and European sales slow down. Company executives push for wide-ranging cost-cuts while unions prepare for tough negotiations
In a market-shaking development Volkswagen reports its quarterly profits dropped to €1.6bn - a whopping 64% decrease from last years results. The companyʼs sales dropped by point-five percent to €78.5bn while car deliveries went down to 2.2m units
The German car-maker faces tough competition in China where local brands like BYD NIO and Xiaomi are taking over with their tech-savvy electric vehicles. The companys deliveries in the worlds largest auto market fell by 10% since the start of the year (which matches Toyotaʼs similar problems in the region)
European operations arent doing better - government rules about emissions force car-makers to sell less-profitable electric cars. The situation got more complex when EU-China trade issues started: Beijing might add new taxes for European cars as pay-back for EUʼs restrictions on Chinese imports
Oliver Blume VWs chief exec thinks the company needs big changes to stay strong. Management wants to:
- Close three German plants
- Cut thousands of jobs
- Lower worker pay by 10%
- Build new battery factories
Our results reflect a challenging market environment and underline the importance of delivering on the performance programs
Union leader Daniela Cavallo started new talks with management about these plans; she hints at possible worker protests if the company doesnt change its mind
