Europe’s leading automaker is confronting its most severe profitability challenge since the diesel emissions scandal. A dramatic decline in earnings for the recently concluded fiscal year has prompted management to implement unprecedented personnel cuts. As the core Volkswagen brand struggles for profitability, its former cash cow, Porsche, has unexpectedly become a significant drag on performance.
In response to the deteriorating financial picture, CEO Oliver Blume is escalating the group’s existing restructuring plan. The company now aims to eliminate 50,000 positions in Germany by 2030, a figure that substantially exceeds the 35,000 job reductions initially negotiated with labor unions.
Financial Results Paint a Stark Picture
The recently published financial statements for 2025 reveal the full extent of the crisis. Consolidated net profit plummeted by 44 percent to €6.9 billion. Simultaneously, the group’s operating profit collapsed by 53 percent to €8.9 billion, falling well short of market analysts’ forecasts.
Shareholders are feeling the strain directly through a reduced dividend payout. The dividend for preferred shares has been cut by approximately 17 percent to €5.26 per share. This fundamental weakness is mirrored in the stock’s market performance. With a current share price of €92.20, the equity has declined by 13.10 percent since the start of the year.
Porsche’s Surprising Struggles
The primary driver behind the weak figures is an unprecedented downturn at the sports car subsidiary, Porsche. Its operating profit plunged by 98 percent to just €90 million, causing the division’s margin to shrink from 14.5 percent to a mere 0.3 percent. The Stuttgart-based manufacturer is grappling with sharply declining sales in China while simultaneously absorbing the high costs associated with a strategic pivot back towards combustion engine technology.
On the competitive front, the Volkswagen Group continues to lose ground in the Chinese market to local rivals such as BYD and Geely. In contrast, the company maintains its position in Europe, where it recently recorded a strong 27 percent market share in electric vehicles.
A Challenging Road to Recovery
For the ongoing 2026 fiscal year, the core Volkswagen Passenger Cars brand is targeting an improvement in its historically weak return on sales, aiming to lift it from three percent to over four percent. Group-wide, management is projecting modest sales growth of up to three percent, with an operating margin goal between 4.0 and 5.5 percent.
Leadership hopes a forthcoming product offensive, featuring more than 20 new models, will initiate a turnaround. The first reliable indicator of whether Wolfsburg’s intensified restructuring course is taking hold will come with the publication of half-year results on July 24, 2026.
