Volkswagen's profit hits lowest level in three years as major overhaul looms

German carmaker hit by high costs, weak demand in China and Europe

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A Volkswagen logo atop the company's headquarters in Wolfsburg, Germany. The carmaker's weak third-quarter profits appears to be partially due to waning market share in China. © Reuters

(Reuters) -- Volkswagen on Wednesday reported a 42% drop in third-quarter profit, its lowest level in three years, as the company's passenger car division struggles with high costs and weak demand in China, while potential plant closures loom in Germany.

VW is locked in a battle with unions over a planned overhaul that includes the possible plant closures in its home market for the first time in its 87-year history.

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