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Volkswagen raises potential job cuts to 100,000 amid China slump
The company expects vehicle sales revenue to fall by up to 3% this year and reported second-quarter operating profit down 9.5% to €3.5bn.
Volkswagen said it expects to sell 3% fewer vehicles this year as it works through a cost-cutting program tied to a sales slump in China. The German automaker also cut its revenue forecast, reversing a previous outlook for a 3% increase on last year’s €321.9bn.
Volkswagen reported second-quarter operating profit fell 9.5% to €3.5bn, below analysts’ expectations for a small rise to €3.9bn. The company said it is raising its job cuts target to 100,000, doubling the number already agreed by unions, with the additional cuts mostly in administrative roles across its global business.
In the first half of the year, Volkswagen delivered 6.3% fewer cars globally, about 4.1m, largely due to weakness in China. Sales in China fell more than 31% in the first half, even as deliveries rose in Europe and North America.
The company faces added pressure from growing competition, including cheaper Chinese brands, and its ongoing challenge to shift customers to electric vehicles. According to Guardian Business, the scale of competition from domestic operators is reflected in Volkswagen’s latest update.