Among the key news on German stocks, Volkswagen AG (DE:VOW) yesterday announced that it is considering closing its Brussels plant for its high-end brand Audi due to a slump in electric vehicle (EV) demand. Consequently, it lowered its 2024 operating return on sales guidance to the range of 6.5% to 7% from the previous range of 7% to 7.5%, citing potential closure costs and other unforeseen expenses.
Volkswagen shares were down 0.089% as of writing.
Volkswagen (VW) is a premium automobile manufacturer with brands such as Volkswagen, Skoda, Audi, Bentley, Ducati, Lamborghini, and others in its portfolio.
Volkswagen’s Growing Challenges
Volkswagen has been facing challenges due to lower-than-expected EV demand, even as the company made substantial investments in capacity and technology development. Earlier this year, VW’s brand Audi cautioned that its 2024 sales would decline to the range of €63 billion to €68 billion, down from €69.9 billion reported in 2023. The return on sales is expected to be between 8% and 10%, following the 9% figure achieved in 2023.
According to the new update, Audi is currently exploring solutions for the restructuring of its Brussels plant, including a possible closure by the end of this process. Audi’s management has been in talks with the Belgian government regarding the future of its Brussels factory, where no further models are currently scheduled beyond the Q8 e-tron.
Additionally, costs associated with the plant closure and other unexpected expenses of up to €2.6 billion would impact VW’s operating results in FY24.
Volkswagen will publish its first-half results for 2024 on August 1.
Is Volkswagen Stock a Good Buy?
According to TipRanks’ consensus, VOW stock has received a Hold rating based on recommendations from four analysts. The Volkswagen share price forecast is €115.67, which is 2.5% above the current price level.
