Volkswagen Slashes Guidance as Woes Pile Up — Update

By Andrea Figueras and Mauro Orru

Volkswagen said it was cutting a key profitability target for the year as it scrambles to contain the fallout from a host of challenges that forced it to significantly downsize its workforce.

The beleaguered German carmaker said Friday that it expected an operating return on sales of up to 1% this year, down from a prior estimate between 4% and 5.5%. The new projection, announced just before market close in Germany, is below analysts' forecast of 4.1%, sending Volkswagen shares nearly 5.6% lower.

The guidance revision comes weeks after Volkswagen's supervisory board approved a plan to double job cuts to 100,000, arguing the group has to remain competitive at a time when the auto sector struggles with U.S. tariffs, rising manufacturing costs and stiff competition from Chinese rivals.

Earlier this month, Volkswagen said it was selling its factory in the German city of Osnabrueck to Israel's Aurelius Capital and the state of Lower Saxony, which aim to repurpose the site to make defense equipment.

The group said restructuring expenses from early retirement packages for some employees as well as the planned sale in Osnabrueck had forced it to revise the outlook.

Long considered a fixture of Germany's industrial base, Volkswagen has been seeking to revive its fortunes for years now, but challenges keep piling up.

The company said a further deterioration, especially in the Chinese market, as well as a shift in demand for battery-electric vehicles, would weigh on operating earnings, meaning that performance would fall short of original expectations, particularly for the Audi and Volkswagen Passenger Cars brands.

The group also said the revision was due, in part, to a non-cash impairment of goodwill of roughly 6 billion euros, equivalent to $6.89 billion, in relation to Porsche AG, in which Volkswagen commands a stake of more than 75%.

Porsche AG has been grappling with its own challenges, and Volkswagen said the impairment would harm its own operating profit in the third quarter.

The sports-car maker is also moving to lower costs, including cutting 5,000 jobs, as it struggles with a decline in demand from Chinese consumers for high-end imported cars.

Volkswagen said it expected a hit of around 2 billion euros in the second half of the year due to restructuring costs, the deteriorating environment and the impairment.

Revenue for the year should decline to around 315 billion euros from 321.9 billion euros in 2025. It had previously said that sales could be stable or decrease by up to 3%, but the new figure is broadly equivalent to the midpoint of a prior guidance range.

Meanwhile, it said it continued to expect net cash flow at its automotive division between 3 billion euros and 6 billion euros and net liquidity in the segment between 32 billion euros and 34 billion euros.

Volkswagen said its outlook was based on assumption that tariffs would remain unchanged and noted that those estimates didn't take into account possible future effects from the war in the Middle East.

The company plans to publish its third-quarter report on Oct. 29.

Write to Andrea Figueras at andrea.figueras@wsj.com and to Mauro Orru at mauro.orru@wsj.com

Corrections & Amplifications

This item was corrected at 1:20 p.m. ET to show that Volkswagen plans to publish it's third-quarter report, not its first-half report, on Oct. 29.

(END) Dow Jones Newswires

September 18, 2026 13:07 ET (17:07 GMT)