Volkswagen has reported a sharp fall in second-quarter earnings as the German automotive giant battles weaker electric vehicle margins, fierce competition from China and the impact of US tariffs.
According to AFP, net profit for the three months ending June fell 32.9 per cent to €1.54 billion (£1.75 billion equivalent reported), compared with the same period last year.
The company attributed the decline partly to a €500 million charge linked to halting production of its electric ID.4 model in the United States, as well as increased sales of lower-margin vehicles.
The 10-brand automotive group, which owns Audi, Porsche, Lamborghini and Skoda, also downgraded its full-year outlook. It now expects sales to remain flat or decline by as much as three per cent, reversing its earlier forecast of up to three per cent growth.
Volkswagen shares fell nearly 2.4 per cent at the opening of trading in Frankfurt before trimming losses to around 1.6 per cent later in the morning.
Chief Financial Officer Arno Antlitz described the results as a warning that the company must overhaul its operations.
“We need a fundamental change in our business model,” Antlitz said, adding that the latest results were “another wake-up call for action.”
The company continues to struggle in China, where deliveries dropped 31.6 per cent in the first half of the year after reaching their lowest annual level since 2011 in 2025.
Volkswagen blamed growing competition from Chinese manufacturers, including BYD, Geely and Chery, which have rapidly expanded their share of the European market.
Antlitz said Chinese rivals were exporting not only vehicles but also “competitive pressure”, forcing Volkswagen to consider further cost-cutting measures.
Chief Executive Oliver Blume has warned employees that the company may need to eliminate another 50,000 jobs, on top of the 50,000 departures already agreed, bringing potential global job losses to 100,000.
If implemented, it would represent the largest restructuring programme in automotive industry history, surpassing the 50,000 job cuts made by General Motors after its 2009 bankruptcy.
Any restructuring is expected to face strong resistance from labour unions and the German state of Lower Saxony, which together control more than half the seats on Volkswagen’s supervisory board.
Although an agreement reached in 2024 ruled out compulsory redundancies and factory closures in Germany until 2030, Blume said the company’s financial situation remained critical.
“We are in constructive dialogue and plan to obtain outstanding approvals as fast as possible,” he said. “It’s too early to talk about employment guarantees.”
