2:04 pm, July 24, 2026
Volkswagen has reported a 9.5% drop in second-quarter operating profit and has warned investors of a tougher trading environment, lowering its revenue outlook for 2026 after warning that US tariffs and mounting competition from Chinese manufacturers continue to weigh heavily on the business.
The German firm now expects annual sales revenue to decline by up to 3 per cent, having previously forecast growth of broadly the same. It maintained its operating margin guidance of between 4.0 per cent and 5.5 per cent, an improvement on last year’s 2.8 per cent.
The downgrade came as Volkswagen reported a 9.5 per cent fall in second-quarter operating profit to €3.5bn, below analyst expectations, despite revenue increasing to €82.4bn and producing an operating margin of 4.2 per cent.
Chief Executive Oliver Blume said the group had managed to offset ‘continued unavoidable headwinds in the double-digit billions’ during the first half of the year, but warned the automotive sector remained under significant pressure.
He cited geopolitical tensions, trade disputes, tighter regulation, volatile markets and growing competition as major challenges facing the industry.
Volkswagen is pressing ahead with an extensive restructuring programme designed to improve competitiveness. Plans include around 100,000 job cuts globally, reduced production capacity and a significant reduction in the number of models offered across the group’s brands.
The proposals are expected to trigger difficult negotiations with labour representatives, alongside the potential closure of four factories.
The manufacturer, which owns brands including Volkswagen, Audi, Porsche, Skoda and Cupra, delivered 6.3 per cent fewer vehicles worldwide during the first half of 2026, largely due to continued weakness in the Chinese market.
However, the company reported an improved performance in North America during the second quarter, while the launch of more affordable electric vehicles under the Volkswagen, Skoda and Cupra brands has helped boost European order books as manufacturers battle for EV market share.