Volkswagen reported a significant net profit drop of nearly 31%, falling to 12.4 billion euros, primarily due to intense competition in China and high restructuring costs, including the closure of the Audi plant in Brussels.

Last year, the board had already reduced its pay by 5%, and the recent cuts will apply to all forms of compensation, including performance-based pay.

Despite a slight revenue increase of almost 1% to 324.7 billion euros, Volkswagen's operating profit fell by over 15% to 19.1 billion euros, resulting in a margin drop from 7.0% to 5.9%.

In light of these financial challenges, the company announced a 30% reduction in dividends, bringing the payout down to 6.36 euros per preferred share.

To further address financial pressures, Volkswagen's management, including CEO Oliver Blume, will forgo 11% of their salaries in 2025 and 2026, with plans for gradual salary restoration starting in 2027.

As part of a long-term restructuring strategy, Volkswagen plans to cut 35,000 jobs in Germany by 2030, which will affect nearly a quarter of its workforce in the core VW passenger car brand.

The company intends to significantly reduce investments, planning to allocate approximately 165 billion euros for new facilities and technology from 2025 to 2029, down from 180 billion euros previously planned.

Volkswagen will gradually reduce investments in combustion engine technology while maintaining flexibility to offer various drive types, focusing on battery production amid slower-than-expected electric vehicle adoption.

Looking ahead, Volkswagen aims for revenue growth of up to 5% in 2025, with operational profit margins expected to remain stable between 5.5% and 6.5%.

Despite the profit decline, Volkswagen employees in Germany will receive a bonus of nearly 4,800 euros for the previous year, slightly higher than the 4,735 euros received the year before.

Volkswagen faces ongoing challenges from political uncertainty, increasing trade restrictions, and geopolitical tensions that complicate its operational landscape.

CEO Oliver Blume remains optimistic, forecasting that the operational return on sales will stabilize within the range of 5.5% to 6.5%.