Volkswagen (VW) is facing significant challenges, including potential job cuts and factory closures, as it navigates ongoing wage negotiations.

The automaker reported a staggering 64% drop in net profit, falling to 1.58 billion euros, largely due to high restructuring costs and declining sales in key markets.

Sales in China have plummeted by 12% in the first nine months of 2024, while Western European sales also saw a slight decline of 1%.

Despite a 6.4% growth in North America, this was not enough to offset the losses in China, where competition and economic challenges are intensifying.

The shortage of electric vehicles in China has shifted consumer preferences towards local manufacturers, further weakening demand for VW's traditional combustion vehicles.

Margins for VW's 'Core' brand group, which includes volume brands like Skoda, have dropped from 4.9% to 4.4%, while the 'Progressive' group, including Audi, fell from 9.1% to 4.5%.

The company has abandoned a long-standing job protection pledge, which had prohibited layoffs until 2029, citing the current economic crisis in the automotive sector.

Wage negotiations are contentious, with the employers' offer of a 1.7% wage increase over 27 months deemed insufficient, especially as inflation continues to rise.

IG Metall leader Christiane Benner has criticized the government for its ineffective crisis management, calling for clearer policies to support negotiations.

CEO Oliver Blume acknowledged that the competitive landscape has dramatically changed, necessitating immediate action to maintain VW's market position.

Finance chief Arno Antlitz emphasized the need for sustainable cost reductions across all brands to ensure job security and improve competitiveness.

Shareholders should prepare for a significantly lower dividend next year, reflecting the company's ongoing financial struggles.