Volkswagen profit falls as carmaker weighs deeper job cuts

On 24 July, Volkswagen said its net profit fell sharply in the second quarter as the carmaker considered up to 100,000 job cuts worldwide and faced stronger competition in and from China.

The 10-brand group said net profit for the three months to the end of June was 1.54 billion euros, or $1.75 billion. That was down 32.9 percent from the same period a year earlier. The previous year's figure had itself fallen by almost 37 percent compared with 2024.

Volkswagen said the result was affected by a 500-million-euro charge linked to stopping US production of its electric ID.4. It also cited negative mix effects, meaning it sold more lower-margin products.

The company, whose brands include Volkswagen, Lamborghini, Audi, Skoda and Porsche, also cut its sales guidance for the year. It now expects sales to be flat or to fall by up to three percent, after previously forecasting growth of up to three percent.

Volkswagen said its results added pressure on a group already affected by slimmer electric-car margins, US tariffs and especially strong Chinese competition. Finance chief Arno Antlitz said the company had to speed up efforts to reduce its cost base and improve earnings quality, and said swift and consistent implementation was now important.

Like other German carmakers, Volkswagen has faced years of declining sales in China, the world's largest market. The company said its vehicle deliveries in China were already at their lowest level since 2011 last year and fell a further 31.6 percent in the first six months of this year.

The source said Chinese brands are also increasing pressure in Europe. Automotive intelligence firm Dataforce said brands including BYD, Geely and Chery held almost 11 percent of the European car market in May, up from just under three percent three years earlier.

Volkswagen CEO Oliver Blume told staff earlier in July that four plants could close and that another 50,000 jobs might have to be cut, on top of 50,000 departures already agreed across the group. The source said that, if carried out, the restructuring would be the largest in automotive industry history, larger than the 50,000 job cuts General Motors made after declaring bankruptcy in 2009.

Any overhaul is likely to face opposition. Labour representatives and the German state of Lower Saxony together hold more than half the seats on Volkswagen's supervisory board. Lower Saxony is a shareholder in the group, holds 20 percent of voting rights, and hosts six Volkswagen plants.

Talk in 2024 of possible plant closures led to an agreement with unions that ruled out factory closures and compulsory redundancies until 2030. That deal included 35,000 job cuts at the Volkswagen brand in Germany by the end of the decade.