Volkswagen has today warned that its cost cutting period was not over and would last beyond the second half of 2024, as its second-quarter operating profit fell amid higher costs.
The results were largely in line with analysts' estimates after the carmaker lowered its outlook in mid-July to 6.5-7% from 7-7.5%.
The German carmaker is also in the middle of a €10 billion savings drive announced last December, with cuts of up to €4 billion due in 2024.
Volkswagen's core brand operating return sank to 5% under the weight of restructuring costs, while Audi's returns were hit by supply chain bottlenecks.
The Porsche brand, which has struggled in the first half of the year with supply chain problems and low China sales, also reported lower returns because of high costs related to model launches, Volkswagen said.
Volkswagen's second-quarter earnings before interest and taxes came in at €5.46 billion, from €5.6 billion in the previous year.
The company's results were also dented by costs related to a possible closure of an Audi plant in Brussels, lower sales in China and expenses linked to deconsolidating VW Bank Russia.
"A return of 6.3% after six months is too low," VW's chief financial officer Arno Antlitz said in a statement. "We will have to make significant cost-cutting efforts in the second half of the year and beyond in order to achieve our goals."
Volkswagen is revamping its line-up globally with bespoke EV models in particular for the Chinese and US markets, in an attempt to defend market share in China, maintain its share in Europe and grow in the US.
The carmaker is one of several legacy firms who have called for patience as they improve their product offerings to stay relevant, even as European and US regulators attempt to keep new and cheaper Chinese EVs out of their markets with tariffs.
Antlitz had said in April that he expected rising orders to have a positive impact on second-quarter results, after the carmaker reported a 20% drop in profits in the first quarter.
