Radical cuts

Now fixed: VW’s profit plummets by 64 percent

The weakening car market and the Group's restructuring are causing the Group problems.(Bild: Longfin Media - stock.adobe.com)

Operating profit fell by 42 percent to 2.9 billion euros compared to the same period last year. Management and employees will meet on Wednesday - the first time since the radical cutback plans were announced. According to the Works Council, the Board of Management wants to close at least three German VW plants.

The VW car company is deep in crisis. A weak industry environment with fewer vehicle sales and the capacity and job cuts initiated within the Group have resulted in a billion-euro burden. On Wednesday at 11 a.m., employees and management will meet officially for the first time since the cost-cutting proposals were made public on Monday.

Three Volkswagen factories on the brink of closure
The Board of Management wants to close at least three Volkswagen factories. Tens of thousands of the 120,000 employees in Germany must fear for their jobs. Austria will also be affected by the cutbacks - over 900 companies are active in the supplier industry.

The Board of Management presented new business figures first thing in the morning and Volkswagen's profits collapsed in the third quarter. Group profit after tax shrank by 64 percent to 1.58 billion euros. The operating result fell by 42 percent to 2.9 billion euros compared to the same period last year.

With a turnover just below that of the previous year, Europe's largest car manufacturer generated a return of 3.6 percent, a good two and a half percentage points less. After nine months, the return of the crisis-ridden core brand VW was only two percent, significantly less than large industrial groups had actually hoped for.

Employees announce resistance
The annual forecast, which was lowered again in September, was maintained by the management around CEO Oliver Blume. Blume has cut red tape within the Group and wants to save billions, in particular to get the low-profit core brand VW Passenger Cars back on track.

Significant salary cuts are also on the cards. The employees have announced fierce resistance and are demanding a more comprehensive approach than just focusing on labor and factory costs. The next round of talks between the company and the IG Metall trade union on the VW in-house wage agreement will take place this Wednesday.