South Korean media: Volkswagen's profit plummets in the second quarter!
On September 2, South Korean media "Global Economy" published an article stating that the German automaker Volkswagen Group saw a significant drop in performance in the second quarter due to U.S. import tariffs and restructuring costs, and has lowered its annual performance expectations.
The European largest automaker, Volkswagen Group, recently announced that its operating profit in the second quarter fell 29% year-on-year to 3.83 billion euros. This figure also fell below the analysts' forecast of FactSet (3.94 billion euros).
The company also stated that due to the trade war led by U.S. President Donald Trump, the company incurred about 1.3 billion euros in costs in the first half of the year, and the restructuring reserve reached 700 million euros.
Therefore, Volkswagen has reduced its operating profit margin expectation for this year from 5.5%-6.5% to 4%-5%, while it predicts that annual sales will remain flat compared to the previous year, instead of the originally set maximum 5% increase.
However, the company said that it expects U.S. tariffs to be reduced to a manageable level.
According to Bloomberg, Volkswagen CEO Oliver Blume said: "We expect the EU and the U.S. to agree to reduce the current 27.5% tariff on the automotive industry to around 15% in tariff negotiations."
Bloomberg also reported that Volkswagen is conducting separate supplementary negotiations with the Trump administration, with the condition of expanding investment in the U.S. Blume said during the earnings call: "We can propose substantial investments, which gives us the opportunity to lower the tariff level. At the same time, this opens up the possibility of exporting to other countries from the U.S."
Volkswagen has lowered its annual performance expectations for this year, stating that the Porsche and Audi brands have been affected by tariffs, but signs of tariff reductions may be a positive turning point worth watching.
Volkswagen said that it is currently building a factory in the U.S. to produce SUVs and pickup trucks under the "Scout" brand, and is also considering producing Audi models locally. The company is also considering exporting more cars from its plant in Chattanooga, Tennessee, which currently produces SUVs for the North American market.
Blume said that the U.S. negotiation team responded positively to Volkswagen's proposal of "for every dollar invested in the U.S., the tariff burden will be reduced by one dollar."
Experts also pointed out that Volkswagen is accelerating the restructuring of its high-cost businesses in Germany. Experts also assessed that the trend of slowing sales in the Chinese market, led by local electric vehicle companies such as BYD, is beginning to ease.
Original: www.toutiao.com/article/1842153032591371/
Statement: The article represents the views of the author.