Volkswagen cuts 2024 outlook as car demand falters

Volkswagen cut its annual outlook for the second time in less than three months on Friday, citing a weaker-than-expected performance at its passenger car division as pressure on Europe's top automaker continues to rise.

The lowered outlook is the latest from Germany's car giants, with Mercedes-Benz and BMW both downgrading their annual forecasts earlier this month as a result of weakening demand in China, the world's biggest car market.

It also comes two days after Volkswagen kicked off crucial talks with IG Metall, Germany's most powerful union, over pay and job protection, a historic conflict that could lead to the first German factory closures in the carmaker's history.

Volkswagen now expects a profit margin of around 5.6% in 2024, down from 6.5-7% previously and below the 6.5% LSEG estimate, while sales are expected to fall by 0.7% to 320 billion euros ($356.7 billion) after the company had initially expected an increase of up to 5%.

Volkswagen said it was cutting its outlook "in light of a challenging market environment and developments that have fallen short of original expectations, particularly at the brands Volkswagen Passenger Cars, Volkswagen Commercial Vehicles and Tech. Components".

The German carmaker, which owns majority stakes in Porsche and truck giant Traton also cut its outlook for global deliveries to around 9 million, down from a prior forecast of a rise of up to 3% from 9.24 million vehicles in 2023.

Porsche, the holding company of the Porsche and Piech families that holds most of the voting rights in Volkswagen and is the carmaker's single biggest shareholder, also cut its own outlook in the wake of Volkswagen's downgrade.

Frankfurt-listed shares in Volkswagen and Porsche were trading 0.7% and 1.6% lower,