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Investing.com -- Volkswagen (ETR:VOWG_p) on Tuesday issued a cautious outlook for 2025, reflecting ongoing global trade tensions, intensifying competition, and broader economic uncertainties.
Despite posting solid financial results for 2024, the German automaker anticipates only modest growth in sales revenue for the coming year, with expectations set at a maximum increase of 5% compared to 2024.
The company projects its operating return on sales to fall within the range of 5.5% to 6.5%, signaling a measured approach to the year ahead.
“Our outlook reflects the global economic challenges and the profound changes that are happening in the industry,” said Arno Antlitz, CFO at Volkswagen in a statement.
The automobile manufacturer reported total sales revenue of €324.7 billion, a slight increase from €322.3 billion in 2023.
However, operating profit declined by 15% to €19.1 billion, primarily due to a rise in fixed costs, including €2.6 billion in restructuring expenses. Vehicle sales also declined, with 9 million units sold in 2024, a 3.5% drop from the previous year.
While growth in South America partially offset declines in China, sales in North America and Europe remained stable.
Volkswagen’s outlook for 2025 is clouded by significant challenges, such as global political instability, rising trade barriers, and an increasingly intense battle for market share in the electric vehicle sector.
The company remains committed to its EV strategy, as evidenced by an 88% increase in battery-electric vehicle (BEV) orders in Western Europe during 2024.
However, the competitive landscape continues to evolve rapidly, with Chinese automakers and established global rivals ramping up their offerings in key markets.
Despite these challenges, Volkswagen is pressing forward with its strategic investments. The company plans to allocate 12% to 13% of its automotive division’s sales revenue toward investment in 2025, focusing on EV expansion, software development, and regional market growth, particularly in the United States.
The automotive division’s net cash flow is projected to range between €2 billion and €5 billion, reflecting both continued investments and the financial impact of restructuring measures.
The broader automotive sector remains volatile, with fluctuating commodity prices, energy costs, and foreign exchange rates adding to the complexity.
Stricter emissions regulations also pose a challenge, requiring sustained investment in both electric and combustion engine technologies to meet diverse market demands.