Volkswagen, one of the world’s leading automakers, is facing a severe financial crisis that may lead to the closure of multiple factories in Germany and put thousands of jobs at risk.
Amid a downturn in profits, Volkswagen’s third-quarter earnings fell over 40%, an outcome driven by rising raw material costs and fluctuating sales, according to Boosted.
According to recent reports, the company now earns just around $140 per car sold, a dramatic shift from previous earnings figures.
Impacts Audi
The downturn has significantly impacted Volkswagen’s “Progressive” segment, especially its premium brand, Audi.
Audi’s sales dropped by 15% in the first nine months of the year, with profit margins shrinking to 4.5%—only slightly higher than Volkswagen’s more budget-friendly models.
Struggling to maintain profitability, Audi has decided to close its Brussels factory, which has been in operation since the 1940s.
This decision is part of Volkswagen Group’s broader restructuring plan aimed at stabilizing finances in a turbulent market.
Closing Down Factories
To address these challenges, Volkswagen has announced plans to shutter three factories in Germany.
The move is expected to result in the loss of thousands of jobs, with remaining employees likely facing salary reductions as part of a cost-cutting strategy.
Thomas Schäfer, head of Volkswagen’s passenger cars division, noted that operating costs at VW factories are twice as high as those of competitors, making drastic adjustments necessary.
Volkswagen’s restructuring efforts, however, come at a time of increased competition in the global auto industry and rapidly rising operational expenses.
Additionally, Volkswagen faces significant competition in the electric vehicle market, where legacy automakers and newcomers alike are vying for market share.
