Volkswagen's profits take big hit on China woes, restructuring costs

German auto giant Volkswagen posted a steep drop in profit last year due to fierce competition in China, one of its most important markets, and high restructuring costs.

The company's annual operating profit fell 15% year-on-year to €19.1 billion ($20.8 billion), while its operating margin declined from 7% to 5.9%.

As part of an ongoing cost-saving initiative, Volkswagen has proposed a €6.36 dividend per preferred share, a 30% decrease from the year before.

Revenues in 2024 edged up by nearly 1% to €324.7 billion.

Volkswagen's once highly profitable Chinese market generated significantly lower earnings, while additional costs were incurred, including expenses related to the closure of Audi's Brussels plant.

Despite these setbacks, the company remains optimistic about 2025 and is targeting sales growth. Group-wide revenues are expected to increase by up to 5% compared to the previous year, with CEO Oliver Blume forecasting an operating margin between 5.5% and 6.5%.

In late 2024, Volkswagen announced plans to cut nearly a quarter of the 35,000 jobs at its core VW brand in Germany by 2030 as part of its restructuring efforts.

Looking ahead, the company anticipates further challenges, including domestic political uncertainty, rising trade restrictions, and escalating geopolitical tensions.