On the Dash:
- Volkswagen kept its 2026 operating margin guidance at 4.0%-5.5% despite a 9.5% drop in second-quarter operating profit.
- CEO Oliver Blume said the company must deepen restructuring as Chinese automakers expand into Europe.
- Volkswagen no longer expects revenue growth this year and now forecasts sales could decline by as much as 3%.
Following a mixed quarterly earnings report, Volkswagen’s CEO Oliver Blume said Friday that the automaker will need to deepen its existing workforce cuts to stay competitive against China.
The automaker reported its second-quarter operating profit fell 9.5% to €3.5 billion ($3.98 billion), while revenue reached €82.4 billion, allowing Volkswagen to maintain its full-year operating margin forecast of 4.0%-5.5%. The result missed the €4.3 billion analysts had expected, based on an LSEG-compiled consensus, and shares fell roughly 3% following the announcement.
However, the automaker now expects revenue to decline by as much as 3% this year, abandoning its previous growth forecast.
Chinese competition drives urgency
CEO Oliver Blume said more than 150 competitors now operate in China, with many expanding into Europe. Chinese brands such as BYD and Geely are increasing both exports and European manufacturing capacity.
Volkswagen said growing competition is forcing the company to accelerate cost reductions. Notably, Blume wants to expand planned workforce reductions to 100,000 jobs and warned four German plants could face closure after 2030.
Volkswagen’s 2024 agreement with unions set a target of cutting 50,000 positions by 2030, a figure Blume now wants to double. Volkswagen’s supervisory board already rejected Blume’s broader restructuring proposal, including the four-plant closures, in a vote earlier this month, and the board is expected to revisit the plan in September. Volkswagen expects additional negotiations with labor unions later this year.
Others cautioned that management must balance reassuring investors while convincing employees that significant restructuring remains necessary.
