VW Makes a Loss in China, Sparking Urgent Call for Cost Cuts
Volkswagen’s underlying operating margin was just 3.8% after nine months, a level its CFO said was too low to fund the company’s...
Volkswagen AG’s Chinese joint ventures swung to a loss in the first nine months, sharpening Chief Financial Officer Arno Antlitz’s push for cost cuts as a market that long powered the carmaker’s earnings deteriorates.
VW’s Chinese joint ventures posted an operating loss of €113 million ($126 million) in the first nine months, compared with a €744 million profit a year earlier for the equity-accounted units, the company said October 29. The reversal underscores how rapidly a market that bankrolled Volkswagen’s global expansion for decades has turned into one of its biggest strategic headaches.
“We must not lose any time and need to act quickly and decisively,” Antlitz said. The shares rose 1.2% at 10:22 a.m. in Frankfurt trading October 29, reversing an earlier decline. The stock is down by a third this year.
The slump in China compounds pressure across the rest of the business. Volkswagen is being hit by U.S. tariffs, new Chinese competitors in Europe and the lower profitability of electric vehicles, while it needs to keep spending heavily on software, batteries and new models. Europe’s biggest carmaker is pursuing efficiency measures aimed at generating about €31 billion in savings.
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