Volkswagen cut its 2026 profit forecast after announcing €10 billion (about $11.5 billion) in exceptional charges, most of them related to struggling Porsche, in a fresh blow to the world's second-largest automaker.
The group cut its forecast for its 2026 profit margin to a maximum of 1%, from a previous range of 4% to 5.5%, warning of further deterioration in market conditions, particularly in China, and an accelerating shift in demand toward battery-electric vehicles.
Porsche faces pressure in China and the United States
Porsche is facing simultaneous pressure from U.S. tariffs and the collapse in demand for foreign luxury-car brands in China, after its profit margin fell to just 1.1% last year. Volkswagen owns 75.4% of Porsche.
Volkswagen said that changing its medium-term assumptions for Porsche's business led it to record an impairment of about €6 billion (about $6.9 billion), as the group confronts sharp shifts in two of its key markets, China and the United States.
Chinese market shrinks 20%
There is no time to waste.
Antlitz pointed to a 20% contraction in the Chinese market, the expansion of Asian competitors in Europe and rising sales of less profitable electric vehicles. The group is also facing high import tariffs in the U.S. market, alongside a decline in its China business, where it remained the largest player in the car market until 2024.
Restructuring and pressure on shares
The developments come two weeks after Volkswagen agreed with shareholders on a major transformation plan that includes eliminating 50,000 additional jobs, simplifying the group's structure and potentially closing plants, in the biggest restructuring in the company's history.
The new warnings triggered a sell-off in the group's shares. Volkswagen stock closed down 5.6%, while Porsche shares fell 3.3% and Porsche SE, Volkswagen's largest shareholder, dropped 4.9% after also cutting its outlook.
The new charges add to the pressure on Volkswagen's restructuring, amid strong competition from Asian automakers, stagnant demand in Europe and the accelerating shift toward electric vehicles.
