Volkswagen’s Profit Declines by 31% in 2024
Volkswagen’s consolidated profit for the year 2024 has dropped by nearly 31% to around 12.4 billion euros. The company’s revenue has increased to almost 325 billion euros. Despite the general crisis in the industry and the specific challenges faced by the Volkswagen group, including a decline in China’s business and the high costs of the company’s reorganization, the management is forecasting a moderate growth of around 5% for this year.
The dividend is expected to be reduced by 30%. Although the approximately 120,000 VW employees will still receive a bonus of around 4,800 euros, which is slightly higher than last year, the company’s bonus payments are likely to come to an end for the time being. The Volkswagen passenger cars and commercial vehicles brands made a positive contribution to the company’s business results.
Growth and Cost-Cutting
Despite the general difficulties in the automotive market, the Volkswagen group is expecting an increase in sales this year. The sales margin is likely to remain in the same range as last year, as predicted by Volkswagen CEO Oliver Blume. The company’s finance chief, Arno Antlitz, explained the outlook, citing global economic uncertainties and the deep-seated transformation of the entire automotive industry, as well as geopolitical tensions.
To address the challenges, Volkswagen has already announced plans to cut around 35,000 jobs in Germany by 2030, which is roughly a quarter of the total number of employees in the Volkswagen passenger cars division.
After significant investments in recent years, including the development of electromobility, the company plans to significantly reduce its investment expenditures. For the next five years, around 165 billion euros are planned for new equipment and software, as Antlitz stated. According to the German Economic News, Volkswagen had initially planned 180 billion euros for the five-year period starting in 2024.
Investments in combustion engine technology will be reduced, but the company still intends to offer customers various propulsion concepts. The expansion of the battery sector will be adjusted to the “market environment” as Antlitz explained. So far, the high expectations for electric vehicles in the industry have not been met. Volkswagen also plans to focus on cooperation, such as with the US electric vehicle manufacturer Rivian.
Volkswagen CEO Blume and the other top executives have agreed to a 11% reduction in their remuneration for 2025 and 2026, as confirmed by a supervisory board spokesperson. Blume’s total remuneration for the year, despite the reduction, still increased by 5.4% to 10.35 million euros, due to his additional role as CEO of Porsche, where the business has performed better than at Volkswagen. The nine-member executive board received a total of around 40 million euros in remuneration.