The Volkswagen brand is one of the largest car manufacturers in the world, but in the third quarter of this year, the company lowered its profit margin forecast based on difficulties in the supply of raw materials.
Like many other industrial firms, carmakers hedge against commodity price swings, potentially causing non-cash gains or losses, usually at the end of each quarter.
This fact had negative consequences because this resulted in a non-financial loss of 2.5 billion euros that it will not be able to make up until the end of the year.
Sales are expected to increase by 10% to 15%
The company expects a year-over-year operating profit of 22.5 billion euros, indicating a return on sales of 7%-7.3%, down from the 7.5%-8.5% forecast.
Volkswagen maintained its outlook for deliveries and sales, still expecting to sell between 9 and 9.5 million vehicles this year.
Over the years, Volkswagen became a symbol of Germany’s economic miracle and went on to operate plants all over the world. Founded in 1937 by the German government to mass-produce a low-priced “people’s car”, Volkswagen Group, aka Volkswagen AG, whose headquarters are in Wolfsburg, Germany is a leading German carmaker. The company was the world’s largest car manufacturer in 2016 and 2017, based on the number of global sales and in 2019, the Volkswagen Group grew its worldwide deliveries by 1.3 percent to 10,974,600 vehicles.
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