Volkswagen warned its future is at risk as profits fell sharply and it signalled deeper cost cuts. The carmaker is battling weak demand in China, rising competition, tariffs and pressure to simplify its complex structure.
Volkswagen’s future is at risk without further cost cuts, the ailing German auto giant warned on Thursday after profits plunged more than expected in an environment where geopolitical tensions, trade tariffs and intense competition are all creating headwinds.
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From January to March, the group's net profit slid 28% to €1.56 billion, and revenues dropped 2% to €75.7bn, worse than analysts’ forecasts.
"The cost reductions planned so far are not enough," said VW chief financial officer Arno Antlitz. "We need to fundamentally change our business model and achieve structural, sustainable improvements — in all areas and at all levels. If we fail to do that, we will jeopardise our future."
Antlitz said a multi-layered cost-cutting programme could include lowering vehicle production costs without reducing quality, significantly reducing overheads and "increasing the efficiency of our plants and accelerating technology development and decision-making."
The carmaker already has plans to axe 50,000 jobs across all its brands in Germany by 2030.
VW, whose 10 brands range from Audi to SEAT and Škoda, will have to adjust its capacity and “work on further optimising costs at our plants,” he continued.
Chinese automakers are not only competing on their home turf but are also gaining market share in Europe, he warned.
Carmakers like BYD have emerged as fierce rivals to Volkswagen in China, traditionally a key source of profits for the German manufacturer, particularly in the EV segment.
Sales are lagging in China
Antlitz also said that US President Donald Trump's tariffs, introduced a year ago, were burdening the group with an extra €4bn in costs annually.
Volkswagen sold 2 million vehicles in the first quarter, down nearly 7% from a year earlier. Growth in South America (+3%), Western Europe (+1%) and Central and Eastern Europe (+7%) partially offset declines in China (-20%) and North America (-9%).
The group is forecasting overall sales to grow between 0% and 3% in 2026 and for its core profit margin to come in between 4% and 5.5 %.
Possible impacts of the war in the Middle East were not included in the forecasts, as they cannot be reliably assessed, Volkswagen said.
The woes of Volkswagen, one of Germany's best-known companies, reflect a broader malaise in Europe's biggest economy, particularly among its traditional manufacturers.
The company's annual profits slid to their lowest level in almost a decade in 2025.
On Thursday, CEO Oliver Blume said VW needed to align its strategy with a new world that was "undergoing fundamental change".
"Wars, geopolitical tensions, trade barriers, tighter regulation, and intense competition are creating headwinds," he said.
The share price was slightly up in the morning in Europe, following the report.
