Volkswagen profit plunges 30.7% as China sales collapse and restructuring costs bite

Profit slumps on China weakness and ID.4 halt

Volkswagen Group's net profit fell 30.7% to €3,103 million in the first half of 2026, compared with €4,476 million a year earlier. Revenue was nearly flat at €158,102 million, down 0.2%. Operating profit dropped 11.6% to €5,931 million, pushing the operating margin down to 3.8% from 4.2%. In the second quarter alone, net profit tumbled 32.9% to €1,538 million, while revenue edged up 2% to €82,444 million. The company attributed roughly €500 million of the decline to the interruption of ID.4 production and a less favourable sales mix.

China sales collapse offsets gains elsewhere

The group's vehicle sales fell 8.4% to just under four million units, dragged down by a 31.6% plunge in China, according to one report, while another source put the China decline at 26%. Intensifying local competition hit the Asian giant hard. In contrast, South America grew 5.2%, Central and Eastern Europe 9.6%, Western Europe 1.3%, and North America 0.9%. Revenue in North America still fell 2.5%, partly due to tariffs imposed by the Trump administration, and Asia-Pacific revenue dropped 23%.

Restructuring deepens with up to 100,000 job cuts

Volkswagen is pressing ahead with a sweeping overhaul. A plan presented in 2025 already targeted 50,000 job reductions, mostly at the VW brand (35,000) and the rest at Audi and Porsche. Last week, CEO Oliver Blume told an internal publication that the company was considering deeper cuts, potentially reaching 100,000 positions worldwide. The group also intends to halve its model range and cut component variety by 75%, while reducing annual production capacity from 12 million to 9 million vehicles.

The environment remains extremely challenging for the automotive industry, with geopolitical crises, trade wars, high regulation and intensifying competition.

Seat bucks the trend with tripling profit

While the parent group struggled, Spanish subsidiary Seat posted a sharp improvement. Its operating profit surged 222% to €122 million, up from €38 million a year earlier, on revenue of €7,700 million (up 1.3%). The turnaround was driven by a new corporate strategy, a cost-discipline programme, and the removal of EU additional tariffs on the Cupra Tavascan. Seat's operating margin reached 1.6%, up 1.1 percentage points. Cupra deliveries hit a first-half record of 170,100 units, up 1.5%, and the recently launched Cupra Raval electric car, built in Martorell alongside the Volkswagen ID.Polo, generated 70,000 orders, doubling initial forecasts. Overall Seat deliveries rose 2% to 329,000 units.

Seat & Cupra continues to advance at a good pace and demonstrate its resilience in a demanding context. The measures we have implemented are delivering tangible results.

Outlook darkens for full year

Volkswagen downgraded its 2026 forecast, now expecting vehicle sales to be flat to down 3% for the full year. The group's operating margin is projected at 3.8%, down from the prior 4.2%. Despite a 50% jump in electric vehicle orders, the company does not expect profit to grow for the rest of the year.