By Rachel More
BERLIN, July 24 (Reuters) – Volkswagen no longer expects revenue to grow this year, after the German carmaker dropped its previous forecast on Friday, setting the stage for a radical overhaul in response to costly tariffs and intensifying competition from China.
The announcement came with second-quarter results showing a 9.5% profit slump, with CEO Oliver Blume pushing for a radical restructuring of the world’s No. 2 automaker, including 100,000 proposed job cuts, to make it more cost-competitive.
Volkswagen now expects a decline of up to 3% in sales revenue this year, having previously forecast growth of up to 3%. The company maintained its forecast for an operating margin in the range of 4.0% to 5.5%, an improvement on last year’s 2.8%.
Shares in the company were 3% lower following the announcement.
QUARTERLY PROFIT MISSES EXPECTATIONS
The German auto group, which includes subsidiaries Porsche and Audi, reported an operating profit of €3.5 billion ($3.98 billion) in the April-to-June period.
Analysts had expected a slight improvement on the same quarter last year, according to a poll conducted by Visible Alpha.
Second-quarter revenue came in at €82.4 billion, higher than forecast. This made for an operating margin of 4.2%.
The group managed to offset “continued unavoidable headwinds in the double-digit billions” in the first half of 2026, Blume said.
“At the same time, the environment for the automotive industry remains extremely challenging,” he said, pointing to geopolitical crises, trade conflicts, high regulatory requirements, volatile markets and intensified competition.
Pending a confrontation with labour representatives over the proposed doubling of current redundancy programmes and the possible closure of four factories, Blume has pledged to trim global production capacity and reduce the group’s model lineup by up to half.
In the first half of the year, Volkswagen delivered 6.3% fewer cars globally, driven largely by ongoing difficulties in China, where a protracted downturn in the world’s largest car market has intensified competition between local brands and international automakers.
In North America, however, Volkswagen was able to regain some ground in the second quarter. The rollouts of entry-level electric vehicles across its VW, Skoda and Cupra brands have also boosted orders in Europe, where local automakers are rushing to secure EV market share as Chinese competitors increasingly look to the region.
($1 = 0.8787 euros)
(Reporting by Rachel More, Editing by Miranda Murray and Tomasz Janowski)
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