Volkswagen reports 64% drop in net profit

LONDON – Volkswagen on Wednesday said its third-quarter operating profit plunged 42% as weak performance in the core passenger car unit and high costs, including for model revamps, hit the automaker.
After nine months, the operating return on sales in the core unit fell to 2%. “This highlights the urgent need for significant cost reductions and efficiency gains,” finance chief Arno Antlitz said in a statement.
Complex governance structures, misjudged investments in electric vehicles (EVs), poor management decisions, sliding revenues from China and Germany’s crippling bureaucracy have all been blamed for the challenges facing the world’s second-biggest automaker.
Europe’s biggest carmaker cut its annual outlook twice during the quarter joining peers and Bayerische Motoren Werke (BMW) and Mercedes-Benz in reporting difficulties.
The company is locked in a battle with unions over a planned overhaul that includes potential plant closures on home soil for the first time in its 87-year history.
A second round of negotiations between Volkswagen and powerful German union IG Metall is due to start later on Wednesday, after the works council head threatened to break off talks and launch strikes.
Earnings before interest and taxes (EBIT) fell to 2.86 billion euros (US$3.09 billion) in the July-to-September period, largely in line with LSEG’s mean estimate of €2.80 billion.
The 10-brand Volkswagen group employs over 680,000 people globally, about120000 at whom work at the core VW brand in Germany. The group has announced it is considering factory closures and significant job cuts to enhance competitiveness.