For the first time in 87 years, the world’s second-largest car maker may close factories
In the first half of 2024, operating profit at the Volkswagen group fell 11 per cent from the previous year, and operating margins fell to 6.3 per cent from 7.3 per cent.Volkswagen was the world’s biggest carmaker in 2019 and its ambition was to displace Tesla as the No. 1 producer of electric vehicles. Given its heft, financial firepower and status as Germany’s biggest private employer and government-coddled global superbrand, the goal did not seem outrageous.
Certainly, that’s what employees and successive German governments believed – and demanded. Employees occupy half the seats on the VW supervisory board, and the state of Lower Saxony controls 20 per cent of the votes in the company. No wonder VW’s bosses succumbed to pressure in 1994 to adopt a no-layoffs policy through 2029. That guarantee is being driven off the cliff by Mr. Blume.
too many companies making too many look-alike products. He predicted that only six big car companies would survive. Since he died in 2018, the industry has consolidated somewhat but another round of mergers – or death of brands – may be in store as profit margins deteriorate and Tesla and Chinese competitors, notably BYD, now the world’s top seller of electric vehicles, dominate EV sales across their price range.
What went wrong? The pandemic helped no one in the industry, but VW compounded the problem by making its EV lunge too late, well after Tesla and BYD, among others, had made their mark in that sector. And when VW did get into the EV game, it produced tech-laden monsters that were too expensive to find a lot of buyers. The luxury Audi Q8 e-tron, which goes for about €80,000 , has been a slow seller, and its Belgian production line may soon close.
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