Volkswagen reported weaker-than-expected second-quarter results on Friday and lowered its 2026 sales outlook, underscoring the mounting challenges facing Europe’s largest automaker as it pushes ahead with a sweeping restructuring program.
The German carmaker posted an operating profit of €3.5 billion ($3.98 billion) for the April to June quarter, a decline of nearly 10% compared with the same period last year. The result fell short of analysts’ expectations of €4.3 billion, according to an LSEG consensus.
Alongside the earnings report, Volkswagen revised its revenue forecast, stating that it now expects sales revenue to decline by as much as 3% in 2026. The company had previously projected revenue growth of up to 3% for the year.
The weaker outlook comes as Volkswagen faces rising costs linked to tariffs, slowing profitability and increasing competition from Chinese automotive manufacturers, particularly in the electric vehicle market.
Earlier this month, the company confirmed plans to eliminate up to 100,000 jobs, doubling the scale of previously reported workforce reductions. The move forms part of a broader effort to reduce operating expenses and improve long-term competitiveness.
In an internal memo to employees, Chief Executive Officer Oliver Blume said Volkswagen’s operating costs remain approximately 20% higher than those of comparable manufacturers, making further cost-cutting measures necessary.
Blume also indicated that the company has yet to identify alternative uses for four German production facilities that had previously been considered for closure. The affected sites include Volkswagen plants in Hanover, Zwickau, and Emden, as well as Audi’s facility in Neckarsulm.
The uncertainty surrounding those factories comes despite an agreement reached with labor unions in late 2024 that prevented plant closures in Germany and ruled out compulsory layoffs through the end of 2030.
Commenting on the company’s performance, Blume said Volkswagen had managed to offset “continued unavoidable headwinds” amounting to billions of euros but acknowledged that market conditions remain difficult.
He cited geopolitical tensions, ongoing trade disputes, stricter regulatory requirements, market volatility and intensifying competition as key challenges affecting the global automotive industry.
Blume described the current environment as an “unprecedented risk scenario” but said Volkswagen is entering the next phase of its transformation from what he characterised as a position of strength while pursuing long-term opportunities.
Volkswagen has already begun reshaping parts of its business in response to changing market conditions. In April, the automaker announced it would end production of the ID.4 electric SUV at its Tennessee plant, citing a more challenging environment for electric vehicle sales in the United States.
Investor sentiment has remained under pressure throughout the year. Volkswagen shares have fallen nearly 30% since the start of 2026, reflecting concerns over slowing earnings, restructuring costs and growing competition in key global markets. The stock was down 3.3% in premarket trading following the release of the latest financial results.
The revised outlook signals that Volkswagen expects challenging conditions to persist as it works to streamline operations, lower costs, and strengthen its position in an increasingly competitive global automotive industry.
