By Mauro Orru

Volkswagen cut its sales and profitability forecasts for the year, joining a growing list of European rivals in lowering their targets as the industry faces an increasingly bumpy transition to electric vehicles.

The German car maker said it now expects sales of around 320 billion euros ($357.68 billion) in 2024 compared with the EUR322.3 billion it reported last year, as the company anticipates about 9 million vehicles will be delivered to customers, below the 9.24 million units delivered in 2023. The company previously had forecast an increase of up to 5% in sales and up to 3% in deliveries.

Earlier this month, Volkswagen said it was considering closing German factories as part of a cost-cutting and restructuring exercise designed to keep the company competitive in a challenging market. Strong European rivals and fierce competition in China from domestic producers have rung alarm bells among Volkswagen executives as labor and production costs weigh on the company's competitiveness.

In China, the company faces added pressure from Chinese carmakers gaining market share because of their aggressive pricing strategies and push for electric vehicles.

Volkswagen also said Friday that operating return on sales--a closely watched measure of profitability--is expected to come in at roughly of 5.6%, below previous guidance for 6.5% to 7%.

Net cash flow for the company's automotive division--another metric closely watched by analysts and investors--is expected to come in around EUR2 billion, down from a previous range of EUR2.5 billion to EUR4.5 billion.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

September 27, 2024 13:25 ET (17:25 GMT)

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