Volkswagen profits slump, cuts 2026 revenue outlook

Volkswagen has reported a softer-than-expected second quarter and taken a more cautious view on next year’s top line, underscoring the pressure facing Europe’s largest carmaker as it prepares a broad restructuring. The company’s latest update also points to renewed strain on margins at a time when the auto industry is coping with tariffs, high costs and aggressive pricing from Chinese rivals.

The German group posted operating profit of 3.5 billion euros in the April-to-June period, down almost 10% from a year earlier. That result fell short of market expectations and added to concerns over the pace of its turnaround. Volkswagen also said it now expects 2026 sales revenue to fall by as much as 3%, reversing a previous forecast for growth of up to 3%.

Restructuring pressure builds

The weaker guidance comes as Volkswagen lays the groundwork for a more extensive overhaul of the company. It has already confirmed plans to cut as many as 100,000 jobs, double the number previously discussed, as it tries to arrest the profit decline. The move highlights how sharply the group is trying to reset its cost base after a period of rising expenses and weaker profitability.

Chief executive Oliver Blume has said the company’s cost structure is far above that of comparable businesses, leaving little room to absorb the hit from tariffs and tougher competition. Volkswagen has also been weighing the future of four German plants, including sites in Hanover, Zwickau and Emden, as well as an Audi facility in Neckarsulm. The company has not identified alternative uses for those factories, according to reports from the broader market.

Market and industrial backdrop

The new outlook is notable because Volkswagen had previously committed to avoiding factory closures in Germany and to ruling out compulsory redundancies until the end of 2030 under a deal with unions reached in late 2024. That agreement now sits alongside a much more difficult operating environment, with management pressing ahead with deeper changes to protect earnings. The tension between those commitments and the current cost-cutting drive is likely to remain a central issue for labor talks.

Volkswagen’s shares fell about 3% in early trading on Friday and are down nearly 30% this year. The stock’s decline reflects investor concern that the company may need longer than expected to restore profitability while also funding the transition to a leaner industrial footprint. For now, the latest numbers suggest the group is entering the second half of the year with less confidence in its revenue trajectory and more urgency around restructuring.

The earnings update also reinforces the wider pressure on European automakers, which face a combination of weak demand in some markets, trade friction and intensifying competition from lower-cost Chinese brands. Volkswagen remains one of the industry’s most important bellwethers, so a downward revision to its outlook carries weight beyond Germany. It points to a sector still struggling to balance scale, employment and competitiveness while the market keeps shifting underneath it.