Volkswagen Profit Falls Nearly 10%, Scraps 2026 Sales Growth Forecast

Volkswagen posted a weaker second-quarter than markets expected on Friday and abandoned its hope for sales revenue growth in 2026, as the German auto giant lays the groundwork for a sweeping overhaul of its business.

The group reported an operating profit of 3.5 billion euros ($3.98 billion) for the April-to-June period, down nearly 10 percent from a year earlier and short of the 4.3 billion euro consensus compiled by LSEG. Operating margin came in at 4.2 percent, well below the double-digit margins the company targeted before a run of setbacks over the past several years.

More significant than the quarterly miss was the change in guidance. Volkswagen had previously told investors to expect sales revenue growth of up to 3 percent in 2026. It now expects revenue to decline by as much as 3 percent instead — a swing of several billion euros in expected income and a rare admission from a company that has historically been reluctant to cut full-year guidance mid-year.

Chief Executive Oliver Blume described the operating backdrop as "more than challenging," pointing to weak consumer confidence across major markets, subdued demand for new vehicles, trade barriers affecting cross-border sales, tightening regulatory requirements — particularly around emissions — and elevated energy costs at the group's European manufacturing base.

The results landed just days after Volkswagen confirmed it is examining cuts of up to 100,000 jobs, roughly double the number the company had previously floated, as part of a restructuring aimed at reducing fixed costs and adapting its factory footprint to slower demand and the costly transition to electric vehicles. The company has said it expects an improved margin in the second half of the year, though it has not detailed specific timelines for the job cuts or which plants would be most affected.

The scale of the potential layoffs sets up a confrontation with IG Metall, Germany's powerful metalworkers' union, which has historically resisted large-scale cuts at Volkswagen and holds significant sway through its representation on the company's supervisory board under Germany's co-determination system. Analysts covering the sector have suggested the scale of the proposed cuts could test the union's leverage in a way not seen in decades, given the severity of the financial pressure facing the company.

Volkswagen is not alone among European automakers grappling with a slowdown — Chinese electric-vehicle makers have taken market share both at home and increasingly in Europe, while legacy manufacturers face enormous capital costs retooling factories for battery-electric production. But as Europe's largest carmaker by volume and one of Germany's most significant employers, Volkswagen's difficulties carry outsized weight for the broader German industrial economy, which has already been contending with high energy costs and weakening export demand.