Volkswagen profit slumps 9.5% as automaker cuts 2026 sales forecast

Volkswagen AG reported second-quarter operating profit of €3.5 billion ($3.98 billion), missing analyst expectations as the German automaker cut its full-year sales forecast and pushed ahead with a radical restructuring plan.

The operating profit fell 9.5% from a year earlier, while revenue came in at €82.4 billion, above consensus estimates, according to a Visible Alpha poll. The operating margin narrowed to 4.2%, within the company's full-year target range of 4% to 5.5%.

"The environment for the automotive industry remains extremely challenging," Chief Executive Oliver Blume said, pointing to geopolitical crises, trade conflicts, high regulatory requirements and intensified competition from China. Volkswagen now expects sales revenue to decline by as much as 3% in 2026, abandoning its previous forecast for growth of up to 3%.

The profit miss and downgrade set the stage for Blume's sweeping overhaul, which includes 100,000 proposed job cuts and the possible closure of four factories. The company delivered 6.3% fewer cars globally in the first half, driven largely by a protracted downturn in China, the world's largest auto market. In North America, Volkswagen regained some ground in the second quarter, while rollouts of entry-level electric vehicles across its VW, Skoda and Cupra brands boosted orders in Europe.

Shares in Volkswagen fell as much as 3.3% in pre-market trading in Germany. The restructuring push, which includes plans to trim global production capacity and reduce the group's model lineup by as much as half, faces a confrontation with labor representatives over the proposed doubling of current redundancy programs. The company maintained its full-year operating margin forecast of 4% to 5.5%, an improvement from last year's 2.8%.

The guidance cut signals management expects headwinds from tariffs and Chinese competition to persist through year-end. Investors will watch the next quarterly update for progress on cost savings and the outcome of labor negotiations over the proposed job cuts.

This article is for informational purposes only and does not constitute investment advice.