Written by Cláudio Afonso | LinkedIn | X
Volkswagen’s core brand is pushing back its profitability target as doubts grow among some board members about whether recently agreed cost-cutting measures will be sufficient.
Citing people familiar with the matter, Handelsblatt reported on Thursday that the carmaker had previously aimed for a 6.5% profit margin at its core passenger car brand by the end of 2026 but now expects to reach that goal in “three to four years.” The brand’s margin currently stands at around 2%.
Volkswagen AG, where the core brand accounts for the bulk of operations, plans to cut 35,000 jobs through voluntary departures and reduce capacity at its German plants by the end of the decade as part of a €15 billion annual savings plan.
The cost-cutting package was finalized shortly before Christmas following weeks of negotiations with employee representatives.
Volkswagen brand chief Thomas Schäfer is expected to present a more subdued economic outlook in an internal meeting with the group’s CEO Oliver Blume.
The German brand had originally planned to launch the ID.7 model in North America last year but announced last May that it would be delayed. Now, the launch has been canceled entirely.
Earlier this week, the outlet reported that Volkswagen is considering establishing production sites in the United States for its high-end Audi and Porsche brands to avoid the import tariffs threatened by newly elected President Donald Trump.
In the third quarter of 2024, the German group’s operating profit dropped to 2.86 billion euros ($2.95 billion), while sales revenue declined 0.5% year-over-year to approximately 78.5 billion euros.
Only two months after Volkswagen officially set the joint venture with the U.S. EV maker Rivian on software and technology, the German car giant is already looking into expanding it to new areas.
After a failed investment in Cariad, the Volkswagen group will use Rivian‘s software and technology while the California-based EV startup continues to prepare for the launch of its R2 and R3 models.
