EV Profitability Deterioration and China Slump Weigh on Volkswagen as It Enters "Emergency Management" Mode

*This content was translated by AI.View Original

The Volkswagen Group is set to launch sweeping emergency management measures and cost-cutting initiatives following a sharp decline in cumulative operating profit for the first three quarters of this year. The company's results were hit hard by reduced profitability from its transition to electric vehicles, sluggish performance in the Chinese market, and the burden of global trade tariffs.

According to the Volkswagen Group's reported results for January through September 2026, group revenue fell 2.2% year-on-year to 233.4 billion euros, while automobile sales volume decreased by 10.6% to 5.9 million units. In particular, operating profit plummeted 98.7% from the same period last year (5.4 billion euros) to just 100 million euros. The decisive factor was the occurrence of special item costs totaling 8.7 billion euros, including 7.8 billion euros concentrated in the third quarter. These special items included a non-cash impairment loss of 6.4 billion euros on Porsche's goodwill and approximately 1 billion euros in asset adjustments for Chinese subsidiaries.

Behind the deteriorating results lies the structural profitability slump of electric vehicles. While new pure electric vehicle (BEV) orders in Europe increased by 39% and BEVs accounted for 40% of the delivery backlog, a paradox emerged where the lower profitability of EVs compared to internal combustion engine vehicles eroded profit margins. The operating profit margin excluding special items remained at around 3.8%.

Arno Antlitz, CFO of the Volkswagen Group, emphasized that there is no room for even a moment's delay, and stated that the company will swiftly execute 31 billion euros worth of restructuring, including streamlining the model LINEup, simplifying organizational structures, improving costs, and enhancing production plant efficiency.

The group lowered its full-year 2026 revenue forecast to approximately 315 billion euros and adjusted its operating profit margin downward to a maximum level of around 1%. Amid continuing uncertainty, the company plans to focus all efforts on defending liquidity by securing 4.4 billion euros in net cash flow through investment cuts and portfolio adjustments.

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*This content was translated by AI.View Original