Volkswagen downgrades its annual forecasts in the face of weaker results

Volkswagen has revised its annual outlook for the second time in less than three months, attributing the changes to underperformance in its passenger car division. This news has prompted concerns about Europe's leading automaker as it faces increasing pressure. The updated outlook follows similar actions by other German car manufacturers, including Mercedes-Benz and BMW, who recently downgraded their annual forecasts due to weakened demand in China, the largest car market globally. 

Germany's most influential union, regarding pay and job protection. These discussions hold significant importance as they could potentially result in the first-ever factory closures in the company's history.

New Profit Margin and Sales Expectations

Volkswagen has adjusted its profit margin expectations for 2024 to approximately 5.6%, down from the previously estimated range of 6.5-7%. This revision also falls below the 6.5% estimate provided by LSEG. Moreover, the company now anticipates a 0.7% decline in sales, projecting them to reach 320 billion euros ($356.7 billion) after initially expecting an increase of up to 5%.

In addition to the adjustments in profit margins and sales, Volkswagen has revised its outlook for global deliveries, now projecting around 9 million units, a decrease from the prior forecast of a potential rise of up to 3% from 9.24 million vehicles in 2023. This news is particularly significant considering the impact it may have on various stakeholders. Furthermore, Porsche, the holding company of the Porsche and Piech families that control the majority of voting rights in Volkswagen, has also revised its own outlook following Volkswagen's downgrade. Consequently, Frankfurt-listed shares in Volkswagen and Porsche experienced a decline of 0.7% and 1.6% respectively.