Volkswagen Presses Ahead With Restructuring as Headwinds Mount — Update

By Dominic Chopping

Volkswagen backed full-year guidance that was cut last month, but said it must move fast to implement restructuring plans as it continued to face headwinds from multiple directions.

The German automaker slashed earnings guidance in September after flagging around 10 billion euros ($11.15 billion) of impairment charges this year linked to its stake in Porsche, tough trading in China and its restructuring efforts.

That guidance targets group sales revenue of around 315 billion euros in 2026, an operating return on sales of up to 1% and net cash flow in the automotive unit of 3 billion to 6 billion euros.

As global challenges in the auto industry intensify, Volkswagen has pledged to accelerate efforts cut its cost base.

"U.S. tariffs weigh on us, the Chinese market is shrinking, and competitive pressure in Europe is increasing significantly," Chief Financial Officer Arno Antlitz said.

"The market success of our electric vehicles is putting additional pressure on our earnings, as we currently earn less from electric vehicles than from combustion-engine vehicles."

An original plan had seen an agreement with its powerful unions to cut 50,000 jobs across the group in Germany by 2030 and slash costs, while an additional plan approved last month will see job losses double to 100,000 and its model portfolio halved. The company employed 648,000 people as of September.

Alongside the job cuts and a streamlined model range, Volkswagen is seeking simpler organizational structures, improved vehicle costs, lower overhead costs, greater efficiency in its plants and faster technology development.

It said Thursday that in conjunction with its third-quarter and nine-month earnings report, swift and consistent implementation of the plan was what mattered now.

"The nine-month results make one thing clear: We cannot afford to lose any time and must act quickly and decisively," Antlitz added.

The group, which houses a stable of brands that includes VW, Audi and Porsche, reported a 6.3% fall in third-quarter revenue to 75.28 billion euros, while the operating loss widened to 5.86 billion euros. The operating margin landed at negative 7.8%.

A FactSet analyst poll had expected operating loss of 5.79 billion euros on revenue of 78 billion euros.

Earnings in the quarter were hit by one-off costs of 7.8 billion euros related to the previously flagged impairments and costs related to the planned sale of its Osnabrueck plant. The weak Chinese market, increasing global pricing and competitive pressure, and the increased share of lower-margin electric vehicle sales also hit results.

Third-quarter vehicle deliveries fell 14% to 1.89 million units and the company expects deliveries of around 8.2 million vehicles this year, down from 9 million in 2025, mainly due to strong declines in China.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

October 29, 2026 04:12 ET (08:12 GMT)