A German flag flies on a barge near the Volkswagen AG factory in Wolfsburg, Germany, Tuesday, March 10, 2026.
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volkswagen The German car giant on Friday reported weaker-than-expected second-quarter profits and abandoned hopes for sales growth in 2026, as it lays the groundwork for a fundamental overhaul of its business.
Europe’s largest automaker reported operating profit of 3.5 billion euros ($3.98 billion) in the April-June period, down nearly 10% from a year earlier and below expectations of 4.3 billion euros, according to consensus compiled by LSEG.
The company also said it now expects sales revenue to decline by up to 3% this year, compared to its previous forecast of an increase of up to 3% in 2026.
The results were announced shortly after the company confirmed it was considering cutting up to 100,000 jobs, twice as many as previously, to counter a multi-billion euro tariff cost and slumping profits due to increased competition from Chinese car brands.
In a widely publicized memo to employees earlier this month, CEO Oliver Bloom said the company needed to cut costs further as the group’s costs were 20% higher than comparable companies.
Volkswagen’s CEO has reportedly said that he has not been able to identify alternative uses for four German factories that were previously at risk of closure. These refer to the Volkswagen plants in Hannover, Zwickau and Emden, as well as the Group’s Audi facility in Neckarsulm.
The company had reached an agreement with the union to avoid factory closures in Germany at the end of 2024 and exclude forced layoffs until the end of 2030.
Volkswagen stock fell 3% on Friday morning. The stock price has fallen nearly 30% since the beginning of the year.
“We need to carry out a second phase of restructuring.”
Volkswagen Chief Financial Officer Arno Antlitz said the auto industry had faced major challenges over the past 12 months, citing the burden of tariff costs, the rapid growth of China’s domestic luxury car market and rapid growth in car exports from Beijing to Europe.
“This weighs on our profit margins,” Antlitz told CNBC’s Annette Weisbach on Friday. “A profit margin of about 4% is clearly a wake-up call that we have to do a second phase of restructuring.”
Asked whether he might consider outsourcing the factory’s production capacity to the defense industry to avoid factory closures, Antlitz said: “There are a variety of options. And look, I’m not calling for layoffs per se, I’m not calling for plant closures per se.”
He added: “We want to reduce our cost structure, we want to increase productivity and increase factory utilization. And if there is a better option, of course we will look at it.”
Antlitz said it would be “much better” for the company to find an alternative solution to closing the plant.
Volkswagen stock price since the beginning of the year.
“Unprecedented risk scenario”
In April, Volkswagen announced that it would end production of the ID.4 electric sport utility vehicle at its Tennessee plant amid the difficult EV environment in the United States.
Volkswagen’s Blume said Friday that the company had managed to “continue against the inevitable headwinds” of double-digit billions.
“At the same time, the environment surrounding the automotive industry continues to be extremely challenging, with geopolitical crises, trade disputes, high regulatory requirements, volatile markets, and increasing competition,” Blume said in a statement.
“Amid an unprecedented risk scenario, the Volkswagen Group enters the next phase of its transformation in a strong position and with a clear understanding of the opportunities ahead,” he added.
