Why has Volkswagen lowered its 2020 sales and profit targets?

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Volkswagen Lowers 2020 Sales and Profit Targets Due to Economic Headwinds

Volkswagen has revised its 2020 financial targets downwards, now anticipating a 20% increase in sales revenue and a 30% increase in pre-tax profit compared to 2016 levels. This adjustment reflects a moderation from the company's previous forecast of a 25% rise in sales revenue and a 40% increase in pre-tax profit by 2020. The decision stems from a reassessment of the global economic landscape and specific market challenges impacting the automotive sector.
Impact of Trade Tensions and Global Slowdown

The primary drivers behind the revised forecast are escalating trade tensions and a general deceleration in global economic growth. Chief Financial Officer Frank Witter explicitly cited "changed economic framework conditions in the automotive markets" as a key factor necessitating this adjustment. These broader economic shifts have directly influenced the company's outlook, prompting a reduction in its anticipated financial performance for the coming year.
Specific Challenges Affecting Revenue Forecast

More granularly, specific geopolitical and economic uncertainties have led to a significant recalibration of revenue expectations. Trade conflicts, including ongoing Brexit-related uncertainties and broader tariff concerns, coupled with growing apprehension about a cooling global economy, have contributed to a five-percentage-point reduction in the sales revenue forecast. These external pressures are expected to exert a consequential influence on the company's profitability.
Continued Expectation of Growth Despite Revision

Despite the downward revision of its targets, Volkswagen still projects that 2020 will represent a period of substantial improvement when compared to 2016 performance. While the immediate outlook has been tempered by prevailing economic conditions, the company maintains a positive trajectory for future growth. This revised outlook follows a recent statement indicating that deliveries for the current year are expected to remain level with 2018 figures, rather than achieving slight growth, with unit sales having fallen by 1.5% in the year leading up to September.

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Why has Volkswagen lowered its 2020 sales and profit targets?

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