Volkswagen’s latest results did not just show a bad year. They showed a company stuck in the uncomfortable middle of the auto industry’s biggest transition in a century. The German giant still sells millions of cars and commands iconic brands, but the old formula that made it dominant is under pressure from every direction.
Volkswagen reported 2025 operating profit of €8.9 billion (about $10.3 billion), down 53% from the previous year and below the €9.4 billion analysts had expected. Revenue held roughly steady at just under €322 billion compared with €324.7 billion in 2024, while operating margin dropped to 2.8% from 5.9%.
Management pointed to several familiar problems. U.S. tariffs hurt profitability. Currency movements also weighed on results. Competition in China intensified, and Porsche, one of the group’s most profitable divisions, faced a strategic reset after demand for electric vehicles proved weaker than expected.
For 2026, Volkswagen expects revenue growth between 0% and 3% and an operating margin between 4% and 5.5%. That implies some improvement from 2025’s weak performance but still leaves profitability well below what investors once expected from Europe’s largest automaker.
Chief financial officer Arno Antlitz described 2025 as a “really challenging” year but said the group remains well positioned in Europe. Volkswagen said it slightly increased market share despite growing Chinese competition and claimed more than 25% share of the European EV market.
At the same time, the company signaled deeper restructuring ahead. CEO Oliver Blume said Volkswagen plans to cut around 50,000 jobs in Germany by 2030 across the wider group, including brands such as Audi and Porsche and the software division Cariad.
China remains a major pressure point. Volkswagen once dominated the world’s largest auto market but is now losing ground to domestic players like BYD and Geely, which have moved faster on electric vehicles and pricing.
Volkswagen’s results capture a much larger shift underway in the global auto industry. For decades, German automakers thrived on a formula built around engineering prestige, global scale, and booming Chinese demand. That combination delivered strong margins and steady growth.
Today, each piece of that formula looks weaker.
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China is no longer the easy profit engine it once was. Domestic brands have become serious competitors, especially in electric vehicles, where they are often cheaper and faster to innovate. What used to be Volkswagen’s biggest growth market has turned into its toughest battlefield.