VW Group to "accelerate" cost cutting after profits plummet to 3.8%

VW Group profits dipped to a historic low of just 3.8% in the first half of 2026, as the company embarks on a wide-reaching restructuring programme aimed at restoring its collapsed margins. The group – which includes Volkswagen, Audi, Seat, Cupra, Skoda, Porsche and Lamborghini – generated €158.1 billion (£135bn) in revenue in the first six months of 2026 – roughly equivalent to last year's performance – but an 11.6% drop in profits signals a need for substantial reform of its business, the company says. The news comes just days after it emerged the company was planning to cut as many as 100,000 jobs – roughly a seventh of its global workforce – as part of a drastic cost-cutting programme aimed at reversing its slump. The company cites international trade restrictions, geopolitical tensions, increased competition and fluctuating emissions regulations among the significant challenges it faces - and says it will take steps to slash costs across its entire operation, in a bid to grow profits in the face of those headwinds. Delivering the results for the company's first-half financial performance, CEO Oliver Blume was optimistic that the firm would ultimately return "a robust performance above the prior year" in 2026 as a whole, as a result of the reorganisation work. In an adjusted 2026 outlook, the company forecasts that sales could dip by up to 3%, but still predicts it will return a margin of 4-5.5% – a significant improvement over the first half – as a results of its cost-cutting measures. Blume highlighted that sales were up globally in the first half - except in China, where they plummeted by 20% – and that the company's "order book reflects a positive trend, with more than 70,000 orders taken so far for the Volkswagen ID Polo and its three small EV siblings. He also said that the company's "disciplined cost management" programme has already "managed to offset continued unavoidable headwinds in the double-digit billions". But, he added: "At the same time, the environment for the automotive industry remains extremely challenging: geopolitical crises, trade conflicts, high regulatory requirements, volatile markets and intensified competition. “In an unprecedented risk scenario, Volkswagen Group enters the next phase of its transformation – from a position of strength and with a clear understanding of the opportunities ahead. With the most comprehensive and far-reaching program in the company’s history – for products, technologies, competitiveness, structures and growth areas.” The company’s employee count is already down around 10,000 – or 1.6% – compared to the mid-point of 2025, and VW Group CFO Arno Antlitz signalled further substantial cuts in his affirmation that the firm’s 3.8% margin was “too low and underlines the call to action”. “In an environment where the Chinese total market is down by 20 percent and Chinese competitors are increasing exports and thereby competitive pressure in Europe, the currently planned initiatives are not sufficient,” he added. He said the firm would “accelerate” efforts to slash costs in all areas, and “significantly reduce complexity” at all levels of its business, including its vehicle and platform line-up, in its equity portfolio, and in its “leadership and decision-making structures”. “What matters now is swift and consistent implementation.” Reports have named various VW Group models, including the Porsche Taycan, Skoda Fabia and US-market Jetta saloon as among the models facing the axe as part of the clampdown on costs - but the company has not yet given details of its plans for a reduction of its model line-up.

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VW Group to "accelerate" cost cutting after profits plummet to 3.8%

Firm moves to dramatically reduce overheads and restore margins as it faces an "unprecedented risk scenario"

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VW Group to "accelerate" cost cutting after profits plummet to 3.8%

Firm moves to dramatically reduce overheads and restore margins as it faces an "unprecedented risk scenario"

More from Autocar

Latest car reviews

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