Trade risks cast a shadow over the outlook! Volkswagen expects its operating profit margin to remain flat this year
Analysts indicate that escalating trade tensions may impact Volkswagen's sales, as the company heavily relies on supply chains in Mexico and Canada, and the U.S. plans to impose tariffs on the two countries pose potential risks. Meanwhile, the threat of increased tariffs on European cars by the U.S. could affect Porsche, which has a high dependence on exports
Volkswagen is facing challenges from weak demand in Europe and escalating trade conflicts, with profitability expected to remain flat this year.
On March 11, Volkswagen announced its 2024 financial report:
Operating profit: €19.06 billion, a year-on-year decrease of 15%, mainly affected by rising costs and "special expenses" related to restructuring strategies, it is expected that the operating profit margin in 2025 will be between 5.5% and 6.5%;
Revenue: €324.7 billion (approximately $352.8 billion), a year-on-year increase of 0.7%, it is expected that revenue in 2025 will grow by up to 5% year-on-year;
Dividend: €6.30, a year-on-year decrease of 30%;
Delivery volume: 9.03 million, a year-on-year decrease of 2.3%, with an estimated delivery volume of 9.1 million in 2025;
Net working capital for the automotive business: €36 billion, a year-on-year decrease of 10.5%, with an expected range of €34 billion to €37 billion in 2025, maintaining a robust financing and liquidity policy remains the group's goal.
As of the time of publication, Volkswagen's European stock rose by 3.6%.
Multiple Pressures Facing Volkswagen
Analysts indicate that escalating trade tensions may impact Volkswagen's sales, as the company heavily relies on supply chains in Mexico and Canada, and the U.S. plans to impose tariffs on the two countries pose potential risks.
Meanwhile, the threat of increased tariffs on European cars by the U.S. could impact Porsche, which has a high dependency on exports.
Volkswagen is also under pressure in the Chinese market—Volkswagen's market share in China is being eroded by local automakers, with domestic competitors like BYD transitioning to electric vehicles more rapidly, posing a challenge to Volkswagen.
In Europe, Volkswagen CEO Oliver Blume is pushing for cost-cutting plans for Porsche and Audi and has reached agreements with unions to restructure the Volkswagen brand.
Additionally, to address the budget pressures faced by European consumers, Volkswagen plans to launch several economical electric vehicles, but these models will not be available until next year at the earliest.
However, in March, the EU granted automakers more time to meet stricter pollution emission standards, meaning Volkswagen can still sell more higher-margin fuel vehicles this year. Nevertheless, overall car sales in Europe remain sluggish as consumers are squeezed by rising living costs