Volkswagen posts 5.8bn euro loss as Chinese competition bites

FRANKFURT: German carmaker Volkswagen reported Thursday a loss of 5.8 billion euros ($6.5 billion) for the third quarter, down from a loss of 1.1 billion euros in the same period last year, as it struggles with intense Chinese competition.

Sales fell 6.3 percent in the quarter to 75.3 billion euros, Volkswagen said. Overall vehicle deliveries fell 14.3 percent worldwide but collapsed almost 40 percent in China.

Like its peers, Volkswagen has struggled with the costs of transitioning to electric vehicles as well as falling demand and cutthroat competition in China, the world’s largest car market.

The 10-brand group, whose brands also include Audi, Seat and Skoda, warned of a 10 billion euro hit to its annual profit last month, driven mainly by a writedown to the value of its stake in Porsche, which is also struggling in China.

Volkswagen plans to cut 120,000 jobs across the group by 2030 in an effort to bring costs down, and revealed Thursday that the restructuring would cost it 31 billion euros.

“What matters now is swift and consistent implementation,” the company’s chief financial officer Arno Antlitz said in a statement. “We cannot lose any time and need to act quickly and decisively.”

Without the eight billion euros’ worth of writedowns and restructuring costs that hit the company this quarter, Volkswagen said its profit margin would have been 3.8 percent.

“That is not enough in the long term,” Antlitz said, warning that the company’s ability to pay for future investments was at stake. “We no longer have unlimited time.”