Disappointment in the automotive giant! Profit expectations have declined.

The Volkswagen Group's shares came under selling pressure as the company lowered its profit forecasts again after two and a half months. The German car manufacturer announced on Friday after the stock market closed that it had reduced its financial expectations for 2024 for the second time in less than three months, citing weaker-than-expected sales performance. Accordingly, Volkswagen expects the profit margin, previously estimated at 6.5-7% for this year, to drop to 5.6% (approximately 18 billion euros).

GOALS NOT ACHIEVED

The German manufacturer also revised its global delivery outlook for 2024, which it had previously forecasted to increase by up to 3% from the 9.24 million vehicle level in 2023, down to around 9 million vehicles. Therefore, Volkswagen, which sold vehicles worth 322 billion euros last year, announced that the previously targeted increase of up to 5% in sales is no longer valid. The company expects sales revenues to be around 320 billion euros in 2024, reflecting a 0.7% decline.

GERMAN AUTOMOTIVE SECTOR SOUNDS THE ALARM

Meanwhile, other German automotive manufacturers, Mercedes-Benz and BMW, also lowered their profit forecasts in September.

Volkswagen had also reduced its earnings forecast in July due to anticipated costs related to the Audi factory in Brussels. While the stagnant economy in Europe negatively affects Volkswagen's vehicle sales, the company's financial services division is earning less as a result. At the beginning of this month, the German car manufacturer Volkswagen announced that, as part of its cost-saving and reduction measures, it would close its factories in Germany for the first time in its history and terminate a 30-year employment protection agreement five years early.

THEY WERE GOING TO OPEN A FACTORY IN TURKEY

Volkswagen's announcement, which abandoned its factory investment in Turkey in 2020, had a "quake" effect in the German automotive sector. The company cited high energy and labor costs in Europe as reasons for reducing its competitiveness and declining sales. Analysts estimate that the cost of closing at least two factories in Germany and laying off 15,000 people will be between 3 to 4 billion euros.

SHARP DROP IN VOLKSWAGEN SHARES

Volkswagen shares fell more than 3% in the German stock market in the morning after the company lowered its 2024 expectations, dropping to 94.10 euros. Thus, the company's share losses have reached 15% since the beginning of the year. The company's shares were trading above 245 euros in April 2021. The company's market value, which was 129 billion euros in 2021, has also decreased to 52 billion euros.