Volkswagen profits hit as high costs, China woes weigh
By AFP
March 11, 2025
Volkswagen has struggled with the shift to electric vehicles
By AFP
March 11, 2025
Volkswagen has struggled with the shift to electric vehicles
- Copyright AFP/File Yuichi YAMAZAKI
Léa Pernelle, with Louis Van Boxel-Woolf in Berlin
German auto giant Volkswagen said Tuesday its annual profits nosedived during a torrid year that saw Europe’s top carmaker increasingly struggle with high production costs and fierce Chinese competition.
At 12.4 billion euros ($13.4 billion) in 2024, net profit fell 30.6 percent compared with the previous year, even as overall sales grew slightly to reach 324.7 billion euros.
The poor results were due to a “significant increase in fixed costs” and one-off expenses totalling 2.6 billion euros, primarily aimed at restructuring, the company said.
Volkswagen has been hit hard not just by rising costs but also a stuttering switch to electric vehicles, where it faces stiff competition from Chinese rivals.
The 10-brand group, 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.
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.
– ‘Uncertainty, tensions’ ahead –
Cost pressures also squeezed Volkswagen’s profit margins down to 5.9 percent in 2024, from some seven percent the previous year.
The outcome was somewhat better than feared by the group, which midway through last year predicted a margin of some 5.6 percent for 2024.
“Consistently reducing costs and increasing profitability” was key for the firm going forward, Volkswagen finance chief Arno Antlitz said in a statement.
But Ferdinand Dudenhoeffer, director of the Center for Automotive Research institute in Germany, said the politics of deep cost cuts would be difficult for the firm, pointing out that it was part-owned by the German state of Lower Saxony.
“The Volkswagen brand, its factories and development centres, are found far too often in Germany, an expensive place to do business, and particularly in Lower Saxony,” he said.
“VW is a ‘semi state-owned’ enterprise and cannot adjust costs like its competitors can.”
Volkswagen said it expected revenue this year to exceed the 2024 figure by “up to five percent”. For 2025, it is aiming for a margin of between 5.5 and 6.5 percent.
But the carmaker also warned 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.
The EU is also in his crosshairs — he is threatening to hit the bloc with 25-percent duties.
Léa Pernelle, with Louis Van Boxel-Woolf in Berlin
German auto giant Volkswagen said Tuesday its annual profits nosedived during a torrid year that saw Europe’s top carmaker increasingly struggle with high production costs and fierce Chinese competition.
At 12.4 billion euros ($13.4 billion) in 2024, net profit fell 30.6 percent compared with the previous year, even as overall sales grew slightly to reach 324.7 billion euros.
The poor results were due to a “significant increase in fixed costs” and one-off expenses totalling 2.6 billion euros, primarily aimed at restructuring, the company said.
Volkswagen has been hit hard not just by rising costs but also a stuttering switch to electric vehicles, where it faces stiff competition from Chinese rivals.
The 10-brand group, 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.
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.
– ‘Uncertainty, tensions’ ahead –
Cost pressures also squeezed Volkswagen’s profit margins down to 5.9 percent in 2024, from some seven percent the previous year.
The outcome was somewhat better than feared by the group, which midway through last year predicted a margin of some 5.6 percent for 2024.
“Consistently reducing costs and increasing profitability” was key for the firm going forward, Volkswagen finance chief Arno Antlitz said in a statement.
But Ferdinand Dudenhoeffer, director of the Center for Automotive Research institute in Germany, said the politics of deep cost cuts would be difficult for the firm, pointing out that it was part-owned by the German state of Lower Saxony.
“The Volkswagen brand, its factories and development centres, are found far too often in Germany, an expensive place to do business, and particularly in Lower Saxony,” he said.
“VW is a ‘semi state-owned’ enterprise and cannot adjust costs like its competitors can.”
Volkswagen said it expected revenue this year to exceed the 2024 figure by “up to five percent”. For 2025, it is aiming for a margin of between 5.5 and 6.5 percent.
But the carmaker also warned 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.
The EU is also in his crosshairs — he is threatening to hit the bloc with 25-percent duties.
By AFP
March 11, 2025
Nissan Rogue: — © Nissan USA
Tomohiro Osaki and Julien Girault
Struggling Japanese automaker Nissan announced on Tuesday that chief executive Makoto Uchida would step down, a move that follows the failure of merger talks with rival Honda.
The company said the leadership change was meant to “achieve the company’s short- and mid-term objectives while positioning it for long-term growth” but did not elaborate.
Ivan Espinosa has been chosen as representative executive officer in Uchida’s place, Nissan said in a statement. The company will hold an online briefing later on Tuesday.
Espinosa joined Nissan in Mexico in 2003 and held posts in Southeast Asia before becoming a director for Mexico and Latin America in 2010. The change is effective April 1, Nissan said.
Nissan announced thousands of job cuts last year after reporting a 93 percent plunge in first-half net profit. It now expects an annual loss of more than $500 million.
The company and Honda announced last month they were scrapping merger talks that would have created the world’s third-biggest auto company by unit sales behind Toyota and Volkswagen.
The discussions — seen as a way to catch up to US titan Tesla and Chinese firms on electric vehicles — are believed to have unravelled after Honda proposed making Nissan a subsidiary instead of an initial plan to integrate under a new holding company.
However, media reports have since said Honda could be prepared to revive negotiations under a different Nissan boss.
Despite the scrapped talks, Honda’s president Toshihiro Mibe has said the automakers would continue to seek “synergy” through a strategic partnership announced in August that also includes Nissan’s junior partner Mitsubishi Motors.
After the failure of the merger talks in February, Uchida “called for opening new discussions with potential partners, because… we cannot do without a partner” to survive in the global market, a source close to the matter told AFP on Tuesday.
“For Nissan to become stronger, it must find a partner in the markets that are its priority,” the source said.
The Nikkei Business weekly magazine, citing unidentified Nissan sources, has reported the company would likely re-consider investment from Honda under its new leadership, but “not in the form of becoming its full subsidiary”.
Nissan is also eyeing a four-way cooperation that would include Taiwanese chip behemoth Foxconn as well as Mitsubishi Motors, the Nikkei Business report said.
Foxconn is the world’s largest contract electronics manufacturer and builds devices for major tech companies, including Apple’s iPhones.
It has recently been pushing into areas ranging from electric vehicles to semiconductors and servers.
Ratings agency Moody’s downgraded the credit rating of Nissan to junk last month, saying the decision “reflects Nissan’s weak profitability driven by slowing demand for its ageing model portfolio”.
Fitch and S&P Global Ratings followed suit, downgrading the Nissan credit rating to a speculative category.
Struggling Japanese automaker Nissan announced on Tuesday that chief executive Makoto Uchida would step down, a move that follows the failure of merger talks with rival Honda.
The company said the leadership change was meant to “achieve the company’s short- and mid-term objectives while positioning it for long-term growth” but did not elaborate.
Ivan Espinosa has been chosen as representative executive officer in Uchida’s place, Nissan said in a statement. The company will hold an online briefing later on Tuesday.
Espinosa joined Nissan in Mexico in 2003 and held posts in Southeast Asia before becoming a director for Mexico and Latin America in 2010. The change is effective April 1, Nissan said.
Nissan announced thousands of job cuts last year after reporting a 93 percent plunge in first-half net profit. It now expects an annual loss of more than $500 million.
The company and Honda announced last month they were scrapping merger talks that would have created the world’s third-biggest auto company by unit sales behind Toyota and Volkswagen.
The discussions — seen as a way to catch up to US titan Tesla and Chinese firms on electric vehicles — are believed to have unravelled after Honda proposed making Nissan a subsidiary instead of an initial plan to integrate under a new holding company.
However, media reports have since said Honda could be prepared to revive negotiations under a different Nissan boss.
Despite the scrapped talks, Honda’s president Toshihiro Mibe has said the automakers would continue to seek “synergy” through a strategic partnership announced in August that also includes Nissan’s junior partner Mitsubishi Motors.
After the failure of the merger talks in February, Uchida “called for opening new discussions with potential partners, because… we cannot do without a partner” to survive in the global market, a source close to the matter told AFP on Tuesday.
“For Nissan to become stronger, it must find a partner in the markets that are its priority,” the source said.
The Nikkei Business weekly magazine, citing unidentified Nissan sources, has reported the company would likely re-consider investment from Honda under its new leadership, but “not in the form of becoming its full subsidiary”.
Nissan is also eyeing a four-way cooperation that would include Taiwanese chip behemoth Foxconn as well as Mitsubishi Motors, the Nikkei Business report said.
Foxconn is the world’s largest contract electronics manufacturer and builds devices for major tech companies, including Apple’s iPhones.
It has recently been pushing into areas ranging from electric vehicles to semiconductors and servers.
Ratings agency Moody’s downgraded the credit rating of Nissan to junk last month, saying the decision “reflects Nissan’s weak profitability driven by slowing demand for its ageing model portfolio”.
Fitch and S&P Global Ratings followed suit, downgrading the Nissan credit rating to a speculative category.
No comments:
Post a Comment