Audi Q8 E-tron EV Facility in Brussels Under Threat
Volkswagen (VWAGY, VWAPY) shares took a beating on Tuesday, closing down by 1.4%. The reason? In a challenging move reflecting current demand trends, Volkswagen is contemplating the closure of its Brussels facility. This plant, which is responsible for manufacturing the Audi Q8 e-tron EV model, may face shuttering due to lackluster interest in the vehicle.
Cost Concerns and Forecast Adjustment
The potential closure of the Brussels facility not only raises operational issues but also financial concerns for Volkswagen. The company anticipates costs associated with shutting down the plant, alongside other unforeseen expenses, to amount to as much as €2.6B in 2024. These expenses are expected to be recognized as charges in the second quarter.
Implications on Operating Returns
Volkswagen (VWAGY, VWAPY) is already feeling the ripple effects of the decision, as evidenced by a revised forecast. The projected operating returns on sales for 2024 have been adjusted to a range of 6.5% to 7.0%, down from the previous estimate of 7.0% to 7.5%. This strategic shift demonstrates the company’s proactive approach to aligning its operations with market dynamics.