Volkswagen profit plunges as carmaker weighs mass job cuts

Volkswagen's net profit plummeted by 32.9 percent in the second quarter, falling to 1.54 billion euros (US$1.75 billion) compared to the same period last year. The German automotive giant, which encompasses brands like Audi, Porsche, and Skoda, is grappling with intensifying competition, especially from Chinese manufacturers, and is reportedly considering significant global job cuts potentially affecting up to 100,000 employees.

The financial results were impacted by a 500 million euro charge related to the cessation of US production for its electric ID.4 model. Additionally, "negative mix effects," indicating a higher proportion of lower-margin products sold, contributed to the decline. This downturn follows a nearly 37 percent profit decrease in 2024 compared to the previous year, highlighting a sustained period of financial pressure on the group.

Adding to its challenges, Volkswagen has revised its annual guidance downwards. The company now anticipates sales to be flat or even decline by up to 3 percent, a stark contrast to its earlier projection of up to 3 percent growth. This adjustment underscores the difficulties the carmaker faces in navigating the current market landscape, which includes slimmer margins on electric vehicles and the impact of US tariffs.

"We must accelerate efforts to structurally lower our cost base and sustainably improve our earnings quality," stated Volkswagen finance chief Arno Antlitz. "What matters now is swift and consistent implementation." The company's financial struggles and strategic considerations come at a critical juncture as it seeks to maintain its market position against a backdrop of rapid technological change and fierce global competition.

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We must accelerate efforts to structurally lower our cost base and sustainably improve our earnings quality. What matters now is swift and consistent implementation.