Audi profit tumbles by 91 percent in Q3

Our current focus is on further enhancing our efficiency and competitiveness

 

By Roland Losch, dpa I Tuesday, Nov. 06, 2024

 

LOWER SAXONY – The operating profit of German carmaker Volkswagen’s subsidiary Audi plummeted by 91% in the third quarter compared to the same period of the previous year, reaching only €106 million ($116 million).

Chief financial officer Jürgen Rittersberger cited several reasons on Tuesday for this decline: a 16% drop in Audi brand sales to 407,000 cars sold, “very intense price competition in Europe and in China,” and primarily the provisions for the closure of the Audi plant in Brussels amounting to €1.2 billion.

The company’s finances remained in the black solely thanks to luxury brands Lamborghini and Bentley.

While Rittersberger reaffirmed the summer’s lowered annual forecast, indicating Audi expects a decline in group revenue from €70 billion to €63 billion – €68 billion, with a reduction in profit margin to 6% to 8%, he added: “Our aim is rather towards the lower edge.”

Audi chief executive Gernot Döllner stated, “In addition to the numerous model launches, we are clearly focusing on lean structures.”

Rittersberger mentioned, “Our current focus is on further enhancing our efficiency and competitiveness.” He emphasized that the company would uphold the employment guarantee at Audi until 2029 and that apprentices would be retained. There is no explicit hiring freeze, but external new hires will be “handpicked.”

Audi employs around 54,000 people in Germany.

The supply issues with the large V6 and V8 engines, which troubled Audi in the first half of the year, have now been resolved, Rittersberger noted, adding that there are now positive catch-up effects in this area.

However, the price war, especially in China, and the ongoing model transition across the board are weighing on the results, he said. Used car prices have stabilized after a sharp decline in the first half of the year.

In the first nine months of the year, the Audi brand sold 1.24 million cars, which is 11% fewer than in the same period of the previous year. Performance in the US was particularly poor due to the lack of parts for large vehicles.

Audi sales dropped by 8.5% to 477,000 cars in China, where the company is starting production of fully electric Audis with partner FAW at the new plant in the north-eastern Chinese city of Changchun.

Sales of the luxury brand Bentley fell by a third in the first nine months, while Lamborghini saw significant growth.

Audi’s revenue after nine months was €46.3 billion, about 8% less than the previous year, with operating profit more than halving from €4.6 billion to €2.1 billion, and the operating margin halving to 4.5%.

After-tax profits in the first nine months stood at €2.4 billion, down from €4.5 billion in the previous year.