Volkswagen reported a steep decline in operating profit as tariffs, weaker sales in China and mounting competitive pressure weighed on the German carmaker’s performance. The company warned that 2026 could remain challenging, with only a modest improvement expected in profit margins.
Key highlights
- Volkswagen operating profit fell more than 50% in 2025
- Profit dropped to 8.9 billion euros, missing analyst forecasts
- US tariffs and China competition hit the company’s performance
- Volkswagen expects 4%-5.5% operating margin in 2026
- The group plans around 50,000 job cuts in Germany by 2030
Europe’s largest carmaker, Volkswagen, reported its operating profit fell by more than half in 2025 to 8.9 billion euros ($10.4 billion), missing analyst expectations of 9.4 billion euros.
The decline was driven by US tariffs, rising competition in China, and costs tied to strategic adjustments at Porsche, which slowed its electric vehicle transition amid weaker demand.
Revenue remained flat at 322 billion euros, while Volkswagen expects modest sales growth of 0%–3% in 2026.
Headwinds hit key markets
Volkswagen faces mounting pressure across its core regions.
- US tariffs have added billions in costs
- Chinese competition is eroding market share
- Geopolitical tensions in the Middle East raise concerns for luxury brands like Audi and Porsche
Executive warnings on volatility
Chief Executive Oliver Blume acknowledged that the business environment is far more unstable than in past decades.
“We are simply seeing how volatile and fragile our world is, with new issues arising every month,” Blume said.
Chief Financial Officer Arno Antlitz emphasised cost reductions and restructuring, but noted the 4.6% operating margin (adjusted for restructuring) is insufficient in the long term.
Margin targets and financial outlook
Volkswagen aims for a long-term operating margin of 8%–10% by 2030.
For 2026, the company expects a margin of 4%–5.5%, up from 2.8% in 2025. Analysts project a 5.2% margin, near the top of Volkswagen’s forecast.
Net cash flow reached 6 billion euros, surpassing expectations, though unions criticised the results amid ongoing job cuts.
Restructuring and job cuts
Volkswagen plans a major restructuring program to improve profitability.
- 50,000 job cuts in Germany by 2030
- Strategic changes at Porsche, where operating profit fell 98% to 90 million euros
- Product launches and cost reductions aimed at strengthening margins
FAQs
Q1. Why did Volkswagen’s profit drop sharply?
US tariffs, rising competition in China, and costs from Porsche’s strategic changes slowed profits.
Q2. How much did operating profit fall?
It fell more than 50% to 8.9 billion euros in 2025.
Q3. What operating margin does Volkswagen expect in 2026?
The company forecasts a margin of 4%–5.5%.
Q4. Is Volkswagen cutting jobs?
Yes. Around 50,000 jobs in Germany will be cut by 2030 under a broad restructuring plan.
Follow Inspirepreneur Magazine for the business news.
