Volkswagen shares slip because it considers Brussels plant closure

Volkswagen shares dipped Wednesday after the corporate issued an in a single day revenue warning and introduced it was contemplating the potential closure of an Audi plant in Brussels.

The corporate has now lowered the forecast for its working return on gross sales to a 6.5% to 7% vary, from 7% to 7.5% beforehand.

It famous that it is usually contemplating the restructuring or potential shutdown of its Audi plant in Brussels, the place it employs 3,000 folks, on the again of weak demand for the Audi Q8 e-tron line — a totally electrical providing from the model, launched in 2019.

Automakers have contended with waning electrical car demand, with European manufacturers going through the compounded problem of a wave of discounted, state-subsidized rival autos produced in China. The EU earlier this month started to implement provisional tariffs on EVs imported from China, consequently.

If it presses forward, this may mark Volkswagen’s first manufacturing facility shutdown in almost 4 many years, because the 1988 closure of its plant in Westmoreland County, Pennsylvania.

The price of the possible closure or of discovering an alternate use for the positioning, amongst different elements, might result in successful of as much as 2.6 billion euros ($2.81 billion) to the corporate’s working revenue within the 2024 fiscal 12 months, Volkswagen stated.

Deutsche Financial institution analysts certified the potential Brussels manufacturing facility shutdown as a “main step in the fitting route,” anticipating associated prices is not going to be cash-relevant within the quick time period. Analysts at brokerage Stifel in the meantime labeled Audi as “Volkswagen’s largest downside” and “the most important concern for traders” on a divisional foundation.

“The larger challenge is the extreme delay in new fashions lately; Audi has been falling behind Mercedes and BMW. We calculate that the common age of Audi’s portfolio is now six years (BMW: three years, Mercedes 3.6 years),” they stated.

Volkswagen has additionally suffered a stoop in total deliveries. The Volkswagen group delivered 2,243,700 autos worldwide over the April-June interval, in response to the Frankfurt, Germany, bourse — down 3.8% on the identical interval of final 12 months. Audi’s efficiency weighed on the outcomes, down 11.3% 12 months on 12 months over the three-month stretch.

Deliveries to China fell by a steep 19.3% within the second quarter, however have been up 5.1% in Western Europe and 10.8% in North America.

Volkswagen’s inventory was down 1.45% at 11:14 a.m. London time on Wednesday. The corporate is scheduled to current its second-quarter outcomes on Aug. 1.

— CNBC’s Ganesh Rao contributed to the report.