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Volkswagen Group, the German automotive giant, has reported a decrease in revenue for the second quarter, despite a slight increase in deliveries. The revenue stood at 80.6 billion euros, marking a 3% drop compared to the same period last year.
The decline was attributed to several factors, including poor performance in daily business with premium brands Porsche and Audi, tariffs in the USA, and high restructuring costs. CEO Oliver Blume expects the revenue to remain lower, aiming for a level similar to last year's.
In an effort to mitigate the impact of tariffs in the USA, Volkswagen is proposing a direct agreement with the U.S. government. The proposal involves Volkswagen offering to invest a minimum of $10 billion in the United States in exchange for tariff reductions. For every dollar Volkswagen invests, it would receive an equal offset against the tariffs it currently pays on vehicles imported into the U.S. market.
Volkswagen's premium sister brands, Audi and Porsche, have been underperforming. Audi plans to cut 7,500 jobs, while Porsche aims to reduce its workforce by at least 1,900. The operating profit for both brands fell significantly, with Audi's operating profit dropping by two-thirds and Porsche's earnings seeing a substantial decrease.
In contrast, the core brand Volkswagen earned significantly more in the second quarter, generating more operating profit than the two premium sister brands combined.
To further cut costs, Volkswagen Group has approved a major savings program, aiming to cut over 35,000 jobs by 2030. Around 20,000 employees have agreed to job cuts, mostly in the form of early retirement.
Despite the challenges, Volkswagen remains optimistic about its electric vehicle (EV) sales. CEO Oliver Blume is pleased with the rising sales figures for electric vehicles and expects the operating profit margin on sales to be between 4.0 and 5.0 percent. Volkswagen has expanded its leading position in electromobility to 28 percent market share in Europe.
The company is investing heavily in electrification and new product lines, with a focus on the American market. Volkswagen is already operating manufacturing plants in Tennessee and is investing $2 billion in a new plant in South Carolina focused on electrified vehicles.
This initiative aligns with Volkswagen's broader aim to reduce the financial burden of U.S. tariffs while boosting its footprint in the American market. The proposal reflects a strategy similar to recent U.S. government trade approaches, which link tariff relief to domestic investment commitments, as seen in agreements with other automakers.
Sources: [1] Volkswagen proposes deal with U.S. government to waive tariffs [2] Volkswagen to cut 35,000 jobs by 2030 [3] Volkswagen to invest $2 billion in new South Carolina plant
Volkswagen Group is planning to invest a minimum of $10 billion in the United States as part of a proposal to the U.S. government, with the intention of receiving tariff reductions and boosting its business in the American market.
The employment situation within Volkswagen's premium sister brands, Audi and Porsche, has become challenging, with Audi planning to cut 7,500 jobs and Porsche aiming to reduce its workforce by at least 1,900, while their operating profit and finance have also taken a hit.
