Volkswagen Profits Plunge 30% in 2024 as China Sales Drop

German automotive giant Volkswagen announced yesterday that its net profit fell dramatically by 30.6% in 2024. The company reported earnings of €12.39 billion, down from €17.86 billion in the previous year.

This decline occurred despite a slight revenue increase of 0.7%, reaching €324.7 billion. Volkswagen attributed the profit drop to multiple factors affecting its operations worldwide.

The company faced significant challenges in China, its largest market, where deliveries plummeted by 9.5% to 2.9 million vehicles. Chinese competitor BYD now dominates the market with 3.84 million cars sold, almost a million more than Volkswagen Group.

Fixed costs surged by €2.6 billion, partially due to extensive restructuring efforts. The company also struggled with higher energy prices and intense competition from Chinese electric vehicle manufacturers.

These factors contributed to a 15% decrease in operating profit, which fell to €19.1 billion. Global vehicle deliveries declined by 2.3% to 9.03 million units. Battery electric vehicle sales also dropped by 3.4% to 744,800 units, contradicting the company’s electrification strategy.

North American sales grew by 6.4% and South American deliveries increased by 15%, but these gains failed to offset losses elsewhere. Volkswagen announced plans to reduce its German workforce by 35,000 positions by 2030.

Volkswagen’s Financial Outlook and Strategic Goals

The company proposed a significantly lower dividend of €6.30 per ordinary share, representing a 30% reduction compared to 2023. Despite these challenges, Volkswagen maintains an optimistic outlook for 2025.

The company expects sales revenue to increase by 5% and projects an operating margin between 5.5% and 6.5%. CFO Arno Antlitz called the 2024 performance “decent” considering the challenging competitive environment.

The automotive industry faces multiple hurdles, including political uncertainty, trade restrictions, and geopolitical tensions. Volkswagen must navigate these obstacles while addressing increased competition and emissions regulations.

The company aims to strengthen its position in electric vehicles and regain market share in China through strategic partnerships and new model launches.