Volkswagen profit plunges to $13.4 billion in 2024 as costs rise

German auto giant Volkswagen said Tuesday its net profit nosedived last year, as Europe's largest carmaker struggled with high production costs and fierce Chinese competition.

At 12.4 billion euros ($13.4 billion) in 2024, net profit fell 30.6 percent compared with the previous year, even as overall sales grew slightly to reach 324.7 billion euros (about $353 billion).

The group's operating result, a closely watched measure of underlying profitability, also fell to 19.1 billion euros, 15 percent lower than in 2023. 

The drop was due to a "significant increase in fixed costs" and one-off expenses totalling 2.6 billion euros, primarily aimed at restructuring, the company said.

Volkswagen has been hit hard not just by rising costs but limped on with a switch to electric vehicles, where it faces stiff competition from Chinese rivals. 

Volkswagen deliveries fell almost 10 percent in China last year, even as they were flat or rose in the rest of the world.

The weakness in key market China was behind an overall 3.5-percent drop in unit sales, with Volkswagen only shifting around nine million vehicles worldwide last year.

Cost pressures also squeezed Volkswagen's operating margin down to 5.9 percent in 2024, from some seven percent the previous year.

The outcome was somewhat better than feared by the group, which midway through last year predicted a margin of some 5.6 percent for 2024.

"Consistently reducing costs and increasing profitability" was key for the firm going forward, Volkswagen finance chief Arno Antlitz said in a statement.

After a bumpy year in which Volkswagen announced plans to cut capacity at its domestic German plants and shed 30,000 jobs at home, the group said it expected a slight pickup in 2025.

Volkswagen said it expected revenue this year to exceed the 2024 figure by "up to five percent". For 2025, it is aiming for a margin of between 5.5 and 6.5 percent.

"Our outlook reflects the global economic challenges and the profound changes that are happening in the industry," Antlitz said.