Volkswagen (ETR:VOWG_p) has revised its margin outlook for the year, attributing the adjustment to potential costs related to an Audi plant closure in Belgium and other unexpected expenses.
The company’s shares fell more than 1% in European trading.
The German automaker lowered its guidance to a maximum of 7 percent, down from a previously forecasted high of 7.5 percent, as stated in a filing on July 9.
VW highlighted additional expenses that impacted its second-quarter results, leading to a total additional burden of 2.6 billion euros ($3.8 billion) on its operating result. Other key forecast measures remain unchanged.
“We see the announcement as part of the cost efficiency and re-sizing program taking place at VW and a possible indicator of upcoming restructuring actions across the European automotive industry in coming years,” Jefferies analysts commented.
“We expect VW to book charges of c.€1.2-1.3bn in Q2 and the balance in Q3,” they added.
Audi’s management has been in discussions with the Belgian government about the future of its Brussels factory, which currently has no new models planned beyond the Q8 e-tron. A decision is expected by the end of the year.
Car manufacturers have been facing challenges with sluggish EV sales, forcing companies like VW and Mercedes-Benz (OTC:MBGAF) Group to reconsider their strategies. Key markets, including Germany, have reduced or eliminated incentives for EVs, resulting in lower-than-expected demand.
Mercedes-Benz reported a significant drop in battery-electric car sales, with a 17% decrease to 93,400 units. The total sales by the Mercedes-Benz core brand fell by 6% to 960,000 units.
Meanwhile, BMW (ETR:BMWG) reported the strongest sales among Germany's top three premium carmakers and was the only brand to significantly increase battery-electric deliveries. The automaker’s total sales rose by 2.3% in the first half of the year to nearly 1.1 million vehicles, with battery-electric sales surging 34% to almost 180,000 units.