Volkswagen collapses with third quarter operating profit plummeting by 42% and cutting factories and salaries (10%). Meanwhile, in Italy the dispute that risks exploding between Stellantis and Parliament is taking place. President John Elkann was “invited” to Parliament to be heard on the difficult situation of the Italian automotive industry and responded with “no thanks”. The political reactions have exploded and a new official call is around the corner.
Volkswagen closed the third quarter of 2024 with alarming data: net profit fell by 63.7% to 1.58 billion euros. Quarterly revenues stood at 78.5 billion euros, down 0.5% compared to 2023, confirming weakness in demand, while operating profit contracted by 41.7%, falling to 2.85 billion euros and below the expectations of analysts, who had expected 3.89 billion. In this context, the operating margin reached just 3.6%, the lowest level in the last four years. The analysis of data for the first nine months of 2024 shows an overall turnover slightly increasing, to 237.3 billion euros, compared to 235.1 billion in the same period of 2023. However, operating profit decreased by 21 %, stopping at 12.9 billion, while net profit collapsed by 30.7%, reaching 8.9 billion. The situation appears critical even considering the overall operating margin of 5.4%, significantly lower than industry standards. “Our nine-month results reflect a challenging market environment and underline the importance of continuing with restructuring programs,” said CEO Arno Antlitz, highlighting the need for drastic cost reductions. Drastic plan which involves the closure of three factories in Germany and a 10% salary reduction for employees. The heated reaction from the unions was immediate.
While in Germany Volkswagen faces unions and the government, in Italy Stellantis finds itself at the center of an institutional dispute, after the group’s president John Elkann declined, in a letter, the invitation to participate in a hearing in the Chamber. Elkann’s refusal, justified by a sort of “CEO Carlos Tavares has already said everything”, raised a reaction from the political world. The President of the Chamber Lorenzo Fontana defined Elkann’s choice to “bypass Parliament” as “serious”. Fratelli d’Italia branded the decision “shameful and scandalous”. And the Chamber’s Productive Activities Committee has made it clear that it is not giving up and that it will “renew the request for a hearing” of the president of the group led by Tavares.
The tension comes in a context of difficulty for the Italian automotive sector, which has seen a decline in Stellantis production in Italy of more than 30% in the first nine months of the year compared to the same period in 2023. The Budget, with a cut of 4.6 billion to the automotive fund, also contributed to worsening relations between the government and Stellantis. Parliamentary sources underline how the group is reducing production in Italy in favor of countries with lower costs, fueling the perception that the company, despite benefiting from national incentives, is not doing enough to support employment in the area.
