Volkswagen is in for another tough year dominated by tariffs and the battle to win back China, after Europe's largest carmaker reported a slump in operating profit on Tuesday and forecast only a modest recovery for its dwindling margin.
Like its rivals, Volkswagen has contended with pressures across major markets, with U.S. tariffs costing the company billions and local competition eroding its share in China, the world's biggest car market.
The German auto group, whose subsidiaries Porsche and Audi have also come under strain, expects an operating margin of between 4% and 5.5% in 2026, after 2.8% in 2025 and 5.9% a year earlier.
Analysts polled by Visible Alpha expect a 5.2% margin this year, at the higher end of the company's forecast range.
Fundamentally different environment
"We are operating in a fundamentally different environment," CEO Oliver Blume said in a statement.
The carmaker's operating profit more than halved in 2025 to 8.9 billion euros ($10.4 billion), missing analysts' forecast of 9.4 billion euros, dragged by tariffs and a costly strategic shift at Porsche, which paused its transition to electric last year amid weak demand.
Revenue was flat at 322 billion euros, with scant hopes for growth in 2026, when the company expects revenue to develop in a range of 0% to 3%.
Again, analysts' expectations were at the higher end of the scale.
CFO Arno Antlitz said product launches and restructuring measures in 2025 were important to boost Volkswagen's resilience.
"But the operating margin of 4.6% adjusted for restructuring is not sufficient in the long run," he said, adding that Volkswagen would continue to rigorously reduce costs.
In January, Volkswagen reported a 2025 net cash flow of 6 billion euros, a major improvement from a forecast for no cash flow, which triggered a share rally but also drew criticism from trade unions who questioned the result as the company was engaging in sweeping job cuts.
The group plans to make around 50,000 job cuts by 2030 in Germany.
This includes a restructuring package at Porsche, whose operating profit disappeared almost entirely in 2025, falling by 98% to 90 million euros.
(Additional reporting by Amir Orusov and Christina Amann, editing by Friederike Heine, Thomas Seythal and Louise Heavens)
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