Volkswagen Slashes 2026 Profit Outlook on China Slump and Porsche Writedown
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Volkswagen has dramatically cut its 2026 profit outlook, now expecting an operating margin of no more than 1%, down from a previous forecast of at least 4%. The German automaker faces a deteriorating business in China, restructuring costs, and a multibillion-euro writedown at Porsche. VW expects around €10 billion ($11.5 billion) in charges this year, including a €6-billion writedown related to Porsche, reflecting revised long-term expectations for the sports-car maker. CFO Arno Antlitz said the Chinese market has contracted by around 20% with no stabilization in sight, while Chinese automakers are gaining domestic market share and expanding into Europe with competitively priced EVs. The faster-than-expected shift toward EVs in Europe is also weighing on profitability at Volkswagen's passenger-car and Audi businesses. The deteriorating outlook is accelerating VW's cost-cutting efforts, including a recent agreement with labor representatives that could increase planned job cuts to 100,000 globally and address excess manufacturing capacity in Germany. Volkswagen shares fell more than 7% following the announcement.
Source report
Charles Kennedy Fri, September 18, 2026 at 11:10 AM PDT | 2 min read
- VOW.DE: -8.31%
- P911.DE: -3.34%
Volkswagen has dramatically cut its 2026 profit outlook as deteriorating business in China, restructuring costs, and a multibillion-euro writedown at Porsche pile pressure on Europe's largest automaker.
The German carmaker now expects an operating margin of no more than 1% this year, down from its previous forecast of at least 4%, according to Bloomberg. Volkswagen shares fell more than 7% following the announcement, dragging other automakers lower.
Key Financial Impacts
- VW expects approximately €10 billion ($11.5 billion) in charges this year, including restructuring costs related to workforce reductions and writedowns on Chinese assets.
- The total includes a €6-billion writedown related to Porsche, reflecting revised long-term expectations for the sports-car maker.
- Excluding exceptional charges, Volkswagen said its operating margin would be around 4%.
China Market Challenges
China represents one of the biggest challenges. Volkswagen CFO Arno Antlitz said the market has contracted by around 20%, with no stabilization currently in sight. Chinese automakers are simultaneously taking domestic market share and expanding into Europe with competitively priced electric vehicles.
EV Transition Pressuring Margins
The faster-than-expected shift toward EVs in Europe is creating another headache. Volkswagen said growing EV sales are weighing on profitability at its Volkswagen passenger-car and Audi businesses because battery-powered vehicles generally generate lower margins than comparable combustion-engine models.
Cost-Cutting Measures
The deteriorating outlook is accelerating VW's efforts to reduce costs. The automaker recently reached an agreement with labor representatives that could increase planned job cuts to 100,000 globally, while management is also seeking to address excess manufacturing capacity in Germany.
Broader Implications
For Volkswagen, the challenge is particularly significant because two pillars that historically supported its sprawling European operations—strong Chinese earnings and premium-brand profits—are weakening simultaneously.
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Volkswagen slashes 2026 profit outlook to 1% margin on €6B Porsche writedown and China slump