INGOLSTADT (dpa-AFX) — Carmaker Audi has multiplied its profit in the third quarter. The Volkswagen subsidiary increased its group-level post-tax profit to EUR718 million, 2.6 times higher than the previous year's figure. However, this significant increase is primarily due to a very weak comparison quarter. Revenue and operating profit figures for the Ingolstadt-based company were already released the previous day by parent group Volkswagen, headquartered in Wolfsburg.
A year earlier, Audi had reported a profit slump of nearly four-fifths, partly due to costs associated with a plant closure in Brussels. All figures refer to Audi as a group, including the Bentley, Lamborghini, and Ducati brands.
When compared to the EUR1.2 billion profit in the third quarter of 2023, the current numbers appear less impressive. In fact, they are similar in scale to the weak results of the first two quarters of the current year. Management has also become more pessimistic for the full year, significantly lowering its profitability forecast.
US Tariffs to Cost EUR1.3 Billion by Year-End
Audi is suffering not only from a challenging market in China with fierce competition, but also from US tariffs. These hit the Ingolstadt-based company particularly hard, as it does not have its own factory in the United States, unlike BMW, for example.
In the first three quarters, tariffs cost Audi EUR850 million, according to CFO Jürgen Rittersberger. By year-end, he expects the figure to reach EUR1.3 billion. In the long term, the situation could change: a decision on whether Audi will establish its own production in the US is expected by the end of the year.
Audi Implements Cost-Saving Measures
"We are countering the challenging macroeconomic environment and intensified competition with consistent cost management and are continuing to work on our financial performance," said Rittersberger. The restructuring must continue decisively and with full force.
In March, Audi announced plans to cut up to 7,500 jobs in Germany by 2029. Since September, the company has been informing employees about early retirement programs. It is still too early to comment on the uptake rate, but interest is reportedly high.
Better Than Parent Company Volkswagen
Despite these figures, Audi is still faring better than its parent company Volkswagen. On Thursday, the Wolfsburg group reported a group-level loss of nearly EUR1.1 billion—in part because another VW subsidiary, Porsche, posted even worse figures than Audi. The sports car and SUV manufacturer is currently under pressure, especially as it has had to scale back its electric mobility efforts due to insufficient customer demand for its electric sports cars. The return to combustion engines is costing billions this year. This shift also affects Audi, as plans for a shared electric vehicle platform have changed.
The Rest of the Industry Also Suffers
The challenges of the Chinese market and US tariffs are affecting the entire German automotive industry. Mercedes, for example, reported a one-third drop in profits for these reasons. BMW will release its figures next week, which are also expected to be weak—earlier this month, the Munich-based company issued a profit warning just hours after announcing its sales figures, mainly because performance in China was worse than expected.
The intensity of competition in this key market is evident from the fact that even market leader BYD recently suffered a sharp drop in profits.
The Next Crisis Looms
The situation for the German automotive industry remains tense—especially as a new concern has recently emerged that has not yet been reflected in current financial figures. A second chip crisis is looming around chipmaker Nexperia.
After the Netherlands took control of a company owned by the Chinese group, supply problems have arisen. The German Association of the Automotive Industry (VDA) recently warned that this "could soon lead to significant production restrictions, and possibly even production stoppages."
Audi itself is cautious regarding forecasts about Nexperia. "Production is currently running according to plan and we are supplied," said Rittersberger, though he added that the issue is very complex. A spokeswoman added: "You are never immune to short-term changes."
