Volkswagen's Revised Forecast Amid Global Economic Pressures

Volkswagen has downgraded its annual profit and sales outlook due to a weaker-than-expected performance in its passenger car division. The downward revision, influenced by a softening global economy and diminishing demand in China, follows similar adjustments by Mercedes-Benz and BMW. The company faces critical negotiations with German union IG Metall over pay and job security.

Volkswagen has revised its annual forecast for the second time within three months, blaming weak performance in its passenger car division. This update mirrors similar adjustments by Mercedes-Benz and BMW due to reduced demand in the crucial Chinese market.

The downgrade comes as Volkswagen engages in pivotal negotiations with IG Metall, Germany's powerful union, concerning pay and job security. This historic conflict could result in the first factory closures for the automaker in Germany.

Volkswagen's revised profit margin now stands at around 5.6% for 2024, down from its previous estimate of 6.5-7%. Sales expectations have also been revised to a fall of 0.7% to 320 billion euros, contrary to initial projections of up to a 5% rise. This downgrade reflects broader challenges facing Germany's heavily industrialized economy, accentuated by issues like high energy prices and increased competition from Asia.

(With inputs from agencies.)