Volkswagen’s second-quarter net profit fell 32.9% from a year earlier to €1.54 billion, it said on Friday, as Europe’s largest carmaker continued to grapple with weak demand in China. The company’s net profit was down from €2.29 billion in the second quarter of 2025, when earnings had already fallen 36% from a year earlier.

Group-wide vehicle deliveries fell nearly 9% to 2.08 million in the quarter, Volkswagen announced earlier. Deliveries in China, its biggest market, dropped by more than a third to 424,300 vehicles, while sales outside China were stronger.

Chief executive Oliver Blume has previously warned that tariffs, wars, geopolitical tensions and intensifying competition were creating headwinds for the company. “The measures that seemed adequate in the past will not suffice to reach the revised objectives and secure the future of the group in the long term.”

Resistance to new cost-cutting plans

Volkswagen has already announced plans to cut 50,000 jobs in Germany by 2030, including 35,000 at the core Volkswagen brand and the remainder at subsidiaries such as Audi and Porsche. More than 37,000 employees have signed agreements to leave the company.

In his new cost-cutting plan, ‘Group Target Picture 2030’, Blume wants to cut another 50,000 jobs worldwide, mainly in the administration services. The plan also foresees significantly lowering car production capacity and output (from 12 to 9 million yearly) and a thorough simplification of the model offer (-50%) and the options policy (-75%).

The plans have met resistance from labor representatives and the German state of Lower Saxony, which owns a 20% stake in Volkswagen and holds two seats on the supervisory board. Together with employee representatives, they control a majority on the board, where media reports said the latest proposals initially failed to win approval.

Blume is aiming to push through the new savings package for the group before the end of the year, saying he is confident the supervisory board will pass resolutions on the matter by then. “We expect to have made great progress on that by the end of the year,” Blume said in an interview with the German press agency dpa.

China

In the largest car market in the world, Volkswagen has (again) seen its sales decline by 36.6% in Q2. “The Chinese competitors are not only exporting their products to Europe, but they also export the competitive pressure,” remarked VW CFO Arno Antlitz. It has prompted its CEO, Oliver Blume, to ask the European Commission to expand the additional import tariffs on Chinese EVs to PHEVS and EREVs.

Volkswagen wants to react with its ‘China for China’ strategic plan, building vehicles specifically made to the expectations of Chinese customers, instead of adapting models originally conceived for the European market. The Group wants to launch 30 new models in China before the end of 2027, says Blume, in an (overheated) market “that only in the first semester of this year has already witnessed the launch of some 500 new models.”

Former profit engines continue to struggle

Audi and Porsche, once among the Volkswagen Group’s most profitable brands, continue to face headwinds.
In the second quarter, Audi’s revenue fell to €15 billion from €17.1 billion a year earlier. At the same time, operating profit declined further from the already weak level recorded in the same period last year.

At sports car maker Porsche AG, automotive revenue, excluding financial services, dropped to €7.8 billion from €8.3 billion a year earlier. Porsche is also in the midst of a major restructuring program and plans to cut additional jobs.

Forecast

In view of all these problems, Volkswagen has revised its revenue forecast for 2026, with a turnover landing between -3% and 0%, while it was between 0% and +3% earlier. The operational margin, on the contrary, has been retained at 4 to 5.5%. It was 3.8% in H2.

If the new strategy goes as planned, Volkswagen Group wants to achieve an 8 to 10% profit margin again by 2030. Its treasury flow has jumped to €4.5 billion in the first semester of 2026, compared to a negative figure last year, indicating that the group still has enough financial breathing room to finance heavy investments.

The recent progress in the European market has undoubtedly played a role here: the order book for full-electric vehicles has grown more than 50% compared to last year, and the first reactions to the smaller, more affordable EVs that start now (VW ID. Polo and ID. Cross, Cupra Raval, and Skoda Epiq) are more than promising.