Volkswagen said Thursday that it lost more than $6 billion in its latest quarter, the most since 2015, adding urgency to its plans to cut costs as its sales continue to sink in China.
The struggling German carmaker, trapped in a dangerous cycle, warned that profit margins were too low to continue investing in the technologies that are crucial to its future. Deliveries in China fell more than 30 percent in the first nine months of the year.
“We cannot afford to lose any time and must act quickly and decisively,” Arno Antlitz, Volkswagen’s chief financial officer, said in a statement.
Volkswagen is facing challenges on every front, hit by a shrinking market in China, punishing tariffs in the United States and mounting competition at home in Europe. Volkswagen is targeting about 31 billion euros ($35 billion) in cost cuts as part of the most sweeping restructuring in the company’s 89-year history.
For many years, Volkswagen’s joint ventures and factories in China contributed half or more of its global profits. Volkswagen today is among the European automakers struggling to adapt to rapidly deteriorating conditions in the world’s biggest car market. The company, which has also been hurt by high energy prices and a costly transition to electric vehicles, plans to cut about 100,000 jobs by 2030, or 15 percent of its global work force.
Underscoring the dilemma in China, Volkswagen’s Porsche brand was once regarded as the world’s most profitable carmaker. Porsche now expects China to account for about a tenth of its sales volume by 2030, compared with more than a third at its peak.
Volkswagen’s operating loss in the July through September period widened to about €5.9 billion, from €1.3 billion a year earlier. That was the largest loss since the fourth quarter of 2015, when the automaker was embroiled in scandal over software in its diesel cars that was designed to cheat on emissions tests. Volkswagen said its profit margin fell to 3.8 percent, meaning for every €100 in sales, less than €4 remain.
“That is not enough in the long term,” Antlitz said in a video on the company’s website.
Although sales of electric vehicles were a bright spot, the company said they were hurting earnings because E.V.s are less profitable than cars with combustion engines.
Volkswagen isn’t the only European carmaker under pressure in China.
Volvo Cars, based in Sweden, said last week that it would cut 2,500 jobs, or 6 percent of its work force, as sales in China in the latest quarter fell by almost half. Volvo’s chief, Hakan Samuelsson, said “nobody will be successful with the old recipe” of developing cars in Europe and selling them at a premium price in China.
“Those times are gone,” he said.
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