Volkswagen (VW) would arguably look exclusive in German with its Beetle, Golf, Polo and Bus models, but the automaker has a massive global footprint and relies on many other countries to manage the meetup lines.
Recently, an automotive conversion market, specifically with respect to electric vehicles, and imaginable calculation errors through control began to derail their success.
New vehicle demand is down in Europe and may never reach pre-pandemic levels that once saw 17 million vehicles sold a year. Demand for VWs, in particular, is in the crosshairs, especially as Chinese rivals take over the global market for electric vehicles.
Last year, the VW logo, the largest logo of the Volkswagen organization in 12 logos, sold 4. 80 million passenger cars worldwide, or 1. 4% less than in 2023, injured through downplayed sales in the key market in China. Operating profit declined to nearly 37% to €1. 34 billion in the first 3 quarters of 2024, compared to €2. 12 billion at the same time in 2023 due to consistent pricing and superior restructuring, according to a company press release.
At home in Germany, VW is in turmoil. The company has announced drastic cuts. Surging energy prices since Russian gas was turned off over the Ukraine war, Chinese competition, the cost of German workers and looming tariffs amid Donald Trump’s return to the White House are making business as usual difficult.
The company declared on December 20 that an agreement had concluded with the unions according to which 35,000 jobs will be eliminated, the remaining VW in Germany has to give up salary increases and bonds in the Comeray years
Could Germany’s pain be a boon for the countries that bring Volkswagen together?
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VW has 76,000 workers in Germany and 63,000 others worldwide.
Whether to be closer to customers or cheaper labor, the company has an extensive production network that stretches globally. Besides Germany, it currently has production facilities in Poland, Spain, Portugal and Slovakia.
All facilities in Russia, including a big plant, were closed and imports were stopped in 2022 after the invasion of Ukraine. A year later, VW sold all its assets in the country, a move other European carmakers also made. A proposed factory in Turkey failed to move forward due to the COVID-19 pandemic.
Beyond, VW gathers cars in Argentina, Brazil, Mexico, the United States, China, India and South Africa.
The first VW floor outside the German doors opened seven decades ago in Distan Brazil. Today, Volkswagen do Brazil is the largest manufacturer in the country, according to the company.
Although South America represents 8% of sales in 2023, the company recently depends on Brazil. VW has an intelligent reputation there and constitutes a giant component of cars on Brazilian roads, and sales have increased.
This good news has bought the company some time. However, the market is too small to compensate for losses elsewhere, and the competition is not far behind.
In 2023, North America made up just over 10% of VW sales, but it is a very important market — one that is about to become more difficult if US tariffs are imposed on vehicles made elsewhere.
Volkswagen has a plant in Tennessee. Counting on cheaper labor and free trade within North America, VW also has a big facility in Mexico. Yet this plan could be thrown into the shredder and be hit by tough US tariffs.
President-elect Donald Trump has his eyes fixed on Germany and German companies. During his presidential campaign, he said: “I want German car companies to become American car companies. I want them to build their plants here.”
Add everything in combination, German car brands produce many cars in the United States. Many are for the domestic market, while others are exported. However, Volkswagen is based on European imports for a completely canopy call in the United States. Costs can be a good fortune for sales and effects of the company.
For years, Volkswagen had wonderful hopes for business in and with China. Beyond the decade, the corporate in the country for the expansion of sales and its production capacities. The two of them are now under fire, and those dreams quickly end.
In 2019, VW El Giantst Automotive Corporate in China and had a market percentage of 19% of the Chinese market plate, which is the world’s giant. For VW, China, the giant and maximum lucrative market in the company, which represents a third of the general sales of the car manufacturer and a giant component of its profits.
Today, VW has a Chinese market share of 14%, a figure that is decreasing. The domestic Chinese rivals are on the fast track and taking sales. They’re smart at making affordable electric cars that consumers like, so reasonable that Canada, the United States, and the EU have recently reached Chinese electric cars with additional prices. However, China is now the largest exporter of cars in global models and less dependent than ever on foreigners.
For all its long history and global footprint, Volkswagen is not immune to downturns. To make this next big curve, the company will need to refocus while paying attention to punitive tariffs, its different and diverse markets and the Chinese competition speeding toward it at warp speed.
Edited By: Uwe Hessler