Volkswagen: Dramatic decline in profits and China crisis shakes group!

Volkswagen: Dramatic decline in profits and China crisis shakes group!

Volkswagen reported a dramatic decline in net profit by almost 41 percent to 2.19 billion euros in the first quarter of 2025. The decline in profits is burdened by special effects, which reports OE24 . While sales rose by around three percent to 77.6 billion euros compared to the same period last year, the company is weaker than expected, especially in the Chinese market. Volkswagen achieves significantly fewer income there with its joint ventures, which has a negative impact on the overall balance.

The competition in China remains an enormous challenge for Volkswagen. According to Tages-Anzeiger , the group recorded a profit of 12.4 billion euros in 2024, which is a decrease of almost 31 percent compared to the previous year. Especially hard competition and high renovation costs, such as the closure of the Audi plant in Brussels, are responsible for the decline in the operational result, which fell over 15 percent to 19.1 billion euros.

Investment strategy and new developments

Volkswagen plans to reduce its investments from 2025 to 2029 to around 165 billion euros after 180 billion euros were already planned in the previous planning period. These changes are necessary to react to the challenges of the rapidly changing market. In addition to the dismantling of around 35,000 jobs in Germany, the battery division will also be expanded. The group has decided to gradually reduce investments in internal combustion engines, while the development of smart networked vehicles is becoming more important.

In a step to strengthen his presence in China, Volkswagen plans to invest around 1 billion euros in a new company with the project name "100%Techco" in Hefei, Province of Anhui, such as Cnev Post . The establishment of this company, which is expected to be ready for operation in early 2024, aims to hire more than 2,000 employees for research and development as well as procurement. "100%Techco" should shorten the development times of new products by around 30 percent and integrate advanced technologies locally in order to better respond to the needs of Chinese customers.

With his "in China for China" strategy, Volkswagen wants to improve the synergies between his joint ventures in China and their F&-programs and at the same time increase profitability. At the Shanghai Auto Show, the company presented 20 electric vehicles, including the latest model ID.7, which celebrated its world premiere. Volkswagen was planning to offer more than 30 fully electric models in its brands by 2030 and offers up to $ 5,820 discounts on ID. Series electric vehicles.