11:57 am, October 29, 2026
Volkswagen Group has warned it ‘cannot afford to lose any time’ in tackling its financial problems after operating profits collapsed by almost 99% in the first nine months of 2026.
The German car giant, which owns brands including Volkswagen, Audi, Skoda and Porsche, saw operating profits plunge from €5.4bn (£4.7bn) to just €71m (£62m) as billions of euros in exceptional charges, falling sales and fierce competition in China took their toll.
The collapse came as the group recorded a €5.86bn (£5.1bn) operating loss in the third quarter alone, compared with a €1.3bn (£1.1bn) loss in the equivalent period of 2025.
It was the largest quarterly deficit since Q4 2015, when the carmaker was gripped by the ‘Dieselgate’ scandal, said Reuters.
Volkswagen blamed a combination of exceptional costs, US tariffs, fierce competition in China and increasing pressure on vehicle prices.
The biggest financial blow came from €8.7bn (£7.6bn) in exceptional charges during the first nine months, including a €6.4bn (£5.6bn) writedown in the value of Porsche goodwill.
A further €1bn (£870m) related to impairments of assets held by fully consolidated businesses in China, while additional costs were linked to the planned sale of Volkswagen’s Osnabruck operation.
Excluding exceptional items, the group’s operating profit stood at €8.8bn (£7.7bn), giving it an adjusted operating margin of 3.8%.
However, bosses warned that even this level of profitability was too low to support the company’s future investment plans.
Group chief financial officer and chief operating officer Arno Antlitz said: ‘The nine-month results make one thing clear: We cannot afford to lose any time and must act quickly and decisively.’
He added: ‘At the same time, US tariffs weigh on us, the Chinese market is shrinking, and competitive pressure in Europe is increasing significantly.
‘The market success of our electric vehicles is putting additional pressure on our earnings, as we currently earn less from electric vehicles than from combustion-engine vehicles.’
Volkswagen’s global vehicle sales fell 10.6% to 5.88 million units during the first nine months, down from 6.58 million a year earlier.
The figures include sales by Chinese joint ventures, where falling volumes contributed heavily to the overall decline. Excluding those joint ventures, vehicle sales were down just 1%.
Battery electric vehicle orders increased by 39% during the first nine months, while total European orders rose 4% to around three million vehicles.
Group revenue slipped 2.2% to €233.4bn (£203.1bn), compared with €238.7bn (£207.7bn) during the same period last year.
The manufacturer also recorded a €2.72bn (£2.37bn) net loss after tax for the nine months, compared with a €3.41bn (£2.97bn) profit in 2025.
Volkswagen is now pressing ahead with a cost-cutting programme worth approximately €31bn (£27bn) as it attempts to restore profitability.
The measures include simplifying its model range, reducing overheads, lowering vehicle production costs and improving factory efficiency.
Some 100,000 jobs are excepted to be cut across the group, which includes the Audi and Porsche brands, and uup to four plants shut.
Antlitz said: ‘With our Future Plan, we have defined the key measures to sustainably improve our profitability: a streamlined model range, simpler structures, improved vehicle costs, lower overhead costs, greater efficiency in our plants, and faster technology development.
‘Together, these form a comprehensive cost program of around 31 billion euros. What matters now is swift and consistent implementation.’
The group’s individual divisions also faced mixed fortunes.
Its ‘Core’ brand group, which includes Volkswagen passenger cars and Skoda, saw operating profit fall from €4.72bn (£4.11bn) to €4.33bn (£3.77bn), with its margin slipping from 4.4% to 4.1%.
Volkswagen said strong performance from Skoda helped offset weaker earnings at its namesake brand, which was affected by the growing proportion of lower-margin electric cars and declining contributions from more profitable combustion models.
Meanwhile, the ‘Progressive’ brand group, which includes Audi, reported a 26% fall in operating profit to €1.15bn (£1bn).
Its operating margin dropped from 3.2% to 2.7%, with weaker sales in China and North America and negative residual value effects weighing on results.
Porsche’s Sport Luxury division recorded an operating profit of €1.49bn (£1.3bn), compared with a €228m (£198m) loss in the same period last year, which had been affected by exceptional items.
The division’s operating margin reached 6.7%, helped by a greater proportion of higher-margin models.
The group is forecasting full-year revenue of approximately €315bn (£274bn), but expects its operating margin to reach no more than 1%.
Its automotive division is expected to generate between €3bn (£2.6bn) and €6bn (£5.2bn) in net cash flow during 2026.
Antlitz said Volkswagen needed to act quickly to improve profitability while continuing to invest in new products and technology.
‘After nine months, our operating return on sales before special items stands at 3.8%,’ he said.
‘That is too low to continue investing strongly in our future.’