VW Profitability Shrinks To Lowest Since Pandemic

German automaker Volkswagen reported its lowest operating margin since the COVID-19 pandemic forced it to halt production, and it reported a 42% decline in operating profit for the July to September quarter.
Last quarter, the German automaker's operating profit fell to $3.1 billion, while its revenue decreased marginally to $84.6 billion. The operating margin for Volkswagen fell to 3.6%, the lowest level in roughly four years.


The poor sales record coincides with Volkswagen's plans to shut down three German plants and start mass layoffs as early as June of next year. About 300,000 people work for Volkswagen in Germany, including tens of thousands who work in its headquarters and ten factories.
The company’s chief financial officer, Arno Antlitz, said: ‘This highlights the urgent need for significant cost reductions and efficiency gains. Employees are worried about their future – we are facing essential and painful decisions.’

It was VW's first formal confirmation of cost-cutting measures. VW has previously told unions that the company is vulnerable due to high costs and decreased demand in China.
While negotiating a new contract with union leaders, the automaker has terminated several labor agreements, including a decades-old job security agreement.

In sharp contrast to the 7% pay increase that the IG Metall union is requesting, Volkswagen is calling for a 10% pay cut and no pay increases for the next two years. Strikes could start on December 1.