German automaker Volkswagen’s operating profit fell nearly 10% year-on-year in the second quarter as tariff costs and intensifying competition weighed on its financial performance.
The company posted an operating profit of €3.5 billion ($4 billion) for the April-June period, below market expectations of €4.3 billion.
Volkswagen also lowered its full-year outlook, saying it now expects sales revenue to decline by as much as 3% in 2026. It had previously forecast revenue growth of up to 3%.
The automaker said geopolitical tensions, trade disputes, regulatory requirements, volatile markets and growing competition, particularly from Chinese manufacturers, continued to pressure profitability.
Volkswagen is preparing a wider restructuring program after confirming plans to cut as many as 100,000 jobs, double the number previously indicated.
CEO Oliver Blume reportedly told employees that Volkswagen’s costs were around 20% higher than those of comparable companies, requiring further cost reductions.
The group has also been unable to identify alternative uses for four German factories previously at risk of closure, including plants in Hanover, Zwickau and Emden, as well as Audi’s facility in Neckarsulm.
Volkswagen reached an agreement with labor unions in late 2024 to avoid factory closures in Germany and compulsory redundancies through the end of 2030.
Chief Financial Officer Arno Antlitz told CNBC that the group’s operating margin of about 4% demonstrated the need for a second phase of restructuring focused on reducing costs, improving productivity and increasing plant capacity utilization.
Volkswagen shares fell about 2% in early trading Friday and have lost nearly 30% since the beginning of the year.