Volkswagen logo on the rear of an ID.7 electric car at the Volkswagen electric car factory in Emden, Germany, February 24, 2026.
Focke Strangman | Getty Images News | Getty Images
German car giant volkswagen on Thursday warned of further cost-cutting measures after reporting lower-than-expected first-quarter profits, citing rising U.S. tariffs and increased competition from Chinese car brands.
Europe’s largest carmaker posted operating profit of 2.5 billion euros ($2.92 billion) in the first three months of this year, down 14.3% from a year earlier and below analysts’ expectations of nearly 4 billion euros, according to consensus compiled by LSEG.
Sales were 75.66 billion euros, down 2.5% from the same period in 2025. Analysts had expected this figure to be 75.45 billion euros.
“War, geopolitical tensions, trade barriers, tightening regulations and intense competition are creating headwinds. In this difficult environment, we have been able to make tangible progress,” Volkswagen CEO Oliver Blume said in a statement.
Volkswagen shares rose about 1.1% on Thursday, erasing losses after hitting a 52-week low in early trading. The stock has fallen more than 17% since the beginning of the year.
The results come as Europe’s top OEMs navigate several industry challenges, from trade uncertainty and high production costs to constraints on electric vehicle adoption and regulatory pressures.
The ongoing Middle East crisis also threatens to dampen demand for luxury cars, with Volkswagen’s Blume warning last month that the Iran war could hurt sales of the company’s Porsche and Audi brands.
Volkswagen is currently implementing significant job cuts and a major product offensive in an effort to improve profitability amid fierce competition from Chinese automakers. Approximately 50,000 jobs are expected to be cut across Germany by the end of 2010.
Further reductions are planned in the future.
However, Volkswagen Chief Financial Officer Arno Antlitz said current market conditions meant the company’s planned cost reductions were not enough.
“We need to fundamentally transform our business model and achieve structural and sustainable improvements. This includes improving the cost structure of our vehicles without compromising the essence of our products, significantly reducing overhead costs, increasing factory efficiency and accelerating technology development and decision-making,” Antlitz said.
“To achieve this, we need to significantly reduce complexity in our product portfolio and technology platform, and in the number of business entities and decision-making layers. This is our focus in the coming months,” he added.
Citi analysts said they were not surprised that Volkswagen was seeking further cost cuts. “While we support these decisions, this signals further abnormal costs in the future and highlights the pressure on VW’s core EU interests as well.”
He added: “We continue to see VW making all the right decisions – and the tough ones – to remain profitable and viable in the face of tough regulations, cost headwinds and competition from low-cost China.”
Looking ahead, Volkswagen said it expects its operating margin to be between 4% and 5.5% in 2026, after 2.8% in 2025.
