VW Group Reports Profit Collapse of One-Third and Plans Further Job Cuts

In the first half of 2026, the Group delivered 4.1 million vehicles – 6.3 percent fewer than in the first six months of the previous year. In the second quarter alone, deliveries across the Group fell by almost 9 percent to 2.08 million vehicles.

Weak Market in China

The slump in China, the Group's most important sales market, weighs particularly heavily. In the People's Republic, sales collapsed by more than a third to 424,300 vehicles. Volkswagen CEO Oliver Blume spoke of an "extrem herausfordernden" environment marked by geopolitical crises, trade conflicts and intensified competition.

The Group responded to the crisis by adjusting its annual forecast. Instead of revenue growth of up to 3 percent, management now expects at best a "stable development" for 2026. The operating margin in day-to-day business is to be at least 4 percent by year-end and at least 8 percent by 2030.

In addition to the cost-saving measures agreed at the end of 2024, Blume announced further cuts. Up to 50,000 additional jobs worldwide and four plants in Germany are under review. Blume described this number as "zunächst erst mal theoretisch" – derived from the targeted cost reductions.

A Further 50,000 Jobs on the List

At the end of 2024, the Group's Board of Management and the employee side had already agreed on the elimination of 50,000 jobs in Germany by 2030. Of these, 35,000 jobs are attributable to the core VW brand, with the remainder at Volkswagen brands such as Audi and Porsche. More than 37,000 employees have already signed corresponding agreements.

According to Blume, the four plants whose futures are in question are Emden, Zwickau, Hannover and Neckarsulm (Audi). They lack a competitive product allocation for the 2030s. Blume also ruled out opening the plants to competitors such as BYD or Geely.

The Group intends to trim its total production to 9 million vehicles per year – around one million fewer than currently and three million fewer than before the coronavirus pandemic. Plans also include halving the number of models and reducing the number of components used to a quarter.

Overall works council chair Daniela Cavallo sharply criticized the plans. "Angriffe auf das VW-Gesetz, die Mitbestimmung und unsere Standorte sind unverantwortlich," she said. "Solche Pläne werden wir mit aller Macht verhindern." Works meetings at the plant locations are planned for the end of August.

Criticism from Works Council and Politics

The state of Lower Saxony, which holds a 20.2 percent stake in VW and possesses a kind of veto right through the VW Act, sided with the workforce. Minister-President Olaf Lies stressed that the structure with the core VW brand within the Group is a successful model and would "unabhängig von politischen Mehrheiten nicht infrage gestellt" be called into question.

A similar picture emerges at the subsidiary brands. At Audi, revenue fell in the second quarter from 17.1 to 15 billion euros, with operating profit falling even more sharply than a year earlier. At Porsche, automotive revenue declined from 8.3 to 7.8 billion euros; the operating margin remained at 8.9 percent, well below previously accustomed levels.

Volkswagen plans to cut capacity by 500,000 units in Europe alone. Management wants to save around 11 billion euros in annual administrative costs – a quarter of the previously calculated value in the indirect area. Blume described the program as "das umfassendste und tiefgreifendste Transformationspaket, was wir je im Volkswagen-Konzern aufgesetzt haben".

Subsidiary Brands Under Pressure

Volkswagen's preferred share has lost more than 30 percent since the beginning of the year. On Friday, it lost a further 1.4 percent in the closing quartet of the DAX. Analysts see the Group in the deepest crisis in its history.

Volkswagen has pledged to make the job cuts socially responsible – primarily through partial early retirement and severance payments. Operational redundancies are excluded until 2030. Blume stressed that before a closure he prefers "intelligente Lösungen" such as arms production or the construction of China models for Germany.

A further Supervisory Board meeting on the plans is scheduled for September. Blume expressed confidence that resolutions could be adopted by year-end: "Da gehe ich schon fest davon aus, dass wir das in diesem Jahr machen müssen."

Volkswagen chief Blume cited tariffs, wars, geopolitical tensions and intensified competition as reasons for the crisis. The US tariff policy under President Donald Trump makes vehicles exported from Germany or Europe considerably more expensive for American customers. At the same time, Chinese manufacturers are pushing onto the market with comparatively affordable vehicles.

Causes of the Crisis

Helena Wisbert, professor of automotive economics at Ostfalia University in Wolfsburg, explained: "Volkswagen konnte in früheren Jahren auf großem Fuß leben, weil das Finanzergebnis vom Erfolg in China gestützt wurde. Das ist mittlerweile anders."

Beatrix Keim, director of the Center Automotive Research (CAR), warned of the regional consequences: "Das alles wird beeinflusst, wenn die Menschen wegfallen, die das eigentlich gebraucht haben." Less volume at the manufacturers also means less volume at the suppliers – with further job losses.

Voices from Academia

Clemens Fuest, president of the ifo Institute in Munich, cautioned: "Wenn die Industrie schrumpft, ohne dass neue, hochproduktive Branchen entstehen, ist der Wohlstand bedroht." Constantin Gall, automotive expert at consultancy EY, called for a clear signal from the state: "Wir brauchen meines Erachtens ein klares Signal von staatlicher Seite, dass hier die Transformation erwünscht und nicht nur erwünscht, sondern entsprechend gefördert wird."

Thorsten Schulten, head of the wage archive at the Institute of Economic and Social Sciences (WSI) of the Hans Böckler Foundation, criticized the approach: "Man hat momentan den Eindruck, dass einige der Automobilunternehmen mit dem Kopf durch die Wand rennen, indem sie ganz massive Forderungen formulieren und auf die Interessen der Beschäftigten relativ wenig Rücksicht nehmen." Major job cuts also lead to membership losses at IG Metall and weaken the union.

At the Wolfsburg site, one of the largest automotive plants in the world with around 60,000 employees, uncertainty is widespread. IG Metall had already called for a demonstration against the restructuring plans on July 9, 2026. The half-year balance sheet, which Volkswagen is expected to present on Friday, is likely to further intensify the debate.