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Volkswagen on September 18 warned of a roughly 10 billion euro ($11.4 billion) hit to its profits, the German automaker said in a disclosure to the capital market as it revised down its guidance for the year. The charges include a 6 billion euro non-cash impairment on its stake in Porsche due to lowered expectations for the luxury brand’s performance in coming years. Finance chief Arno Antlitz noted in an internal memo that the company has no time to lose in addressing the challenges.
According to an internal communication reviewed by Reuters, Antlitz cited a 20 percent contraction in the Chinese market, the entry of Asian competitors into Europe and growing sales of less profitable electric vehicles as key pressures. Volkswagen now forecasts an operating margin of 1 percent at most for 2026 compared with the prior range of 4.0 percent to 5.5 percent. The update follows a similar impairment of 5.1 billion euros booked on Porsche in September 2025 after the sports car maker adjusted its product strategy.
Reuters reported that Porsche sales have declined sharply in China where the brand has reduced its dealer network. The unit reported a margin of only 1.1 percent in the previous year, prompting its own round of job reductions totaling 5,000 positions. Antlitz added that the group expects around 2 billion euros in additional charges during the second half from China asset impairments, a German plant sale and early retirement expansions.
The profit warning deepens an ongoing crisis at the world’s second-largest automaker by sales volume, Volkswagen said in its disclosure. The company plans to eliminate around 100,000 jobs globally by the end of the decade as part of its transformation, officials have stated. Market data showed shares in Volkswagen closed 5.6 percent lower following the announcement while Porsche shares fell 3.3 percent and its majority owner Porsche SE dropped 4.9 percent.
A June 2026 Reuters review of Volkswagen’s challenges highlighted that the group’s profit margins had more than halved between 2021 and 2025 amid rising competition, higher costs and weak European demand. Profits from its China operations have plunged more than 80 percent over the past 10 years, the analysis found. The latest figures underscore the persistent difficulties facing European automakers in adapting to electric vehicle demand shifts and geopolitical trade barriers.
Volkswagen indicated the special items will mostly affect third-quarter results with the impairment hitting operating profit then. Without the one-off charges the margin would have come in at approximately 4 percent, the company said. The development arrives weeks after the group finalized a transformation agreement that includes potential plant closures and structural simplifications.
