The brakes have been slammed on Volkswagen: in a press release dated 11 March 2025, the German car giant announced a 30.6% fall in net profit in 2024, down to €12.39bn. The cause: falling sales in China and soaring costs. This is a wake-up call for a sector already under pressure.

After three buoyant years, the German automotive industry is feeling the impact of a market that is undergoing a complete transformation. Rising energy costs, slowing demand, the meteoric rise of Chinese manufacturers in the electric segment: the storm was predicted, but it’s now hitting with full force, as Volkswagen is feeling.

China, the Achilles heel

Despite an upturn in North America (+6,4%), Volkswagen Group saw its sales fall by 9.5% in China, its main market, where it is losing ground to rivals better positioned in the all-electric market. This decline weighed heavily on the group as a whole, whose overall deliveries fell by 2.3% over the year.

The Wolfsburg-based carmaker also suffered an increase in fixed costs, linked to its restructuring programme, which weighed on it to the tune of €2.6bn, according to the press release. As a result, the operating margin measuring profitability has melted like snow in the sun, falling from 7.9% in 2022, to 7% in 2023, to 5.9% last year.

Volkswagen has, however, announced that it has limited the damage: it had expected even worse profitability and posted sales up by 0.7% to €324.66bn, a better performance than expected.

In the midst of restructuring, Europe’s leading carmaker announced an unprecedented cost-cutting plan this winter, involving the loss of 35,000 jobs in Germany. The aim was to regain competitiveness. The road ahead remains winding, but Volkswagen is staying the course. For 2025, the manufacturer on an increase in sales of 5% and an operating margin between 5.5% and 6.5%.

This article in French.