Volkswagen has ‘a yr, possibly two to show round’, monetary chief warns

Volkswagen says it has “a yr, possibly two” to adapt to a droop in European automobile gross sales, because it seeks to justify proposals to shut factories in Germany for the primary time in its historical past.

The carmaker instructed employees at a gathering at its Wolfsburg headquarters on Wednesday that it anticipated to promote 500,000 fewer automobiles than earlier than the Covid pandemic, “the equal of round two vegetation”, and predicted it will not return to its 2019 degree.

Volkswagen disclosed the plans to close two German factories, one making vehicles and one elements, to its works council on Monday, prompting fury from employees representatives and politicians.

The closure plans current a major drawback for the chancellor, Olaf Scholz, whose governing coalition is underneath extreme strain after shedding an election within the German state of Thuringia to Various für Deutschland. It was the primary time a state election had been gained by a far-right celebration because the Nazi interval.

Volkswagen was second solely to Japan’s Toyota in 2023 automobile gross sales. Greater than some other firm, VW is emblematic of Germany’s mighty automotive business, which has been one of many forces making the nation Europe’s industrial coronary heart. It employs 300,000 individuals in Germany out of a worldwide workforce of 650,000.

Nonetheless, Volkswagen and different European rivals have been gradual to embrace electrical vehicles, which has put them at an obstacle as rivals from China goal Europe to promote their cheaper electrical vehicles.

Arno Antlitz, Volkswagen Group’s chief monetary officer, stated the carmaker had “a yr, possibly two years, to show issues round”.

Volkswagen stated Europe’s automobile gross sales wouldn’t return to the 16m throughout the market in 2019 – earlier than the pandemic disturbed international provide chains, and semiconductor laptop chip shortages, particularly, slowed automobile manufacturing.

“The market in Europe has recovered since then – however is not going to return to its former degree,” Antlitz stated. “We count on round 14m automobiles to be bought per yr sooner or later, if in any respect. And that has nothing to do with our merchandise or poor gross sales efficiency. The market is just not there.”

Antlitz spoke of monetary issues on the Volkswagen model, particularly. “We’ve been spending extra money on the model than we earn for a while now. That doesn’t go nicely in the long run. If we supply on like this, we gained’t succeed within the transformation.”