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Volkswagen lowers its operating return on sales to a range of 6.5%-7.0% due to possible closure of Brussels plant
- Due to a sharp drop in the demand for Audi Q8 e-tron, Audi is restructuring its Brussels plant, a process which may result in the closure of the plant.
- As a result, Volkswagen Group will book a charge of €1.7 billion in the third quarter, leading to adjustment of its guidance for operating return on sales to a range of 6.5%-7.0% (previously: 7.0%-7.5%).
- Volkswagen Group already booked a provision of €0.9 billion in the second quarter due to the deconsolidation of Volkswagen Bank Rus and planned closure of the gas turbine business of MAN Energy Solutions.
"The Audi Q8 e-tron model family, which is currently produced at the Audi site in Brussels, is affected by a segment-specific intensified drop in demand, "Audi statement reads. “With the ramp-up of the new models on the Premium Platform Electric, the company is now seeing a drop in demand for the Q8 e-tron. This has resulted in a sharp drop in incoming orders.”
- Volkswagen Group shares shed 2% following the report.
Assessment
The closure of the Brussels plant doesn’t mean Audi wants to discontinue Audi Q8 e-tron since it was already planning to shift the model’s production to San José Chiapa plant or China. Though only 47,000 units of Audi Q8 e-tron were delivered in 2023, the decline in its demand is a bad sign for other Volkswagen EV SUVs.