- Volkswagen’s operating profit plunged over 50 percent in 2025.
- Tariffs and Chinese rivals squeezed the group’s margins hard.
- Company now plans deep restructuring and major spending cuts.
Volkswagen just revealed its operating profit sank like a stone last year, dropping by more than half as tariffs, Chinese competition, and shifting strategies took a serious bite out of the bottom line. And that performance now has the VW Group’s execs reaching for the cost-cutting scissors, including plans to shed 50,000 jobs by the end of the decade.
The German automaker reported an operating profit of €8.9 billion ($10.3 bn at current rates) for 2025. That’s down a hefty 53 percent from the year before and well below what analysts were expecting. Revenue, meanwhile, barely moved, slipping only slightly to around €322 billion ($374 bn).
Related: VW’s 1 Millionth EV Took 12 Years, Its 2 Millionth Took 10 Months
So what went wrong? Call it a perfect storm. For starters, tariffs introduced by the U.S. government have been expensive for global manufacturers, and Volkswagen says they’ve already cost the company billions. Then there’s China, which remains VW’s biggest market but is also becoming far more competitive as local brands gain ground fast.
Porsches Really Are Expensive
Even Porsche ended up adding to the pain. The sports car maker recently adjusted its strategy and decided to stick with combustion engines longer after EV demand proved softer than expected. That rethink triggered more than €3 billion ($3.5 bn) in extraordinary costs for the group.
Put it all together, and Volkswagen’s operating margin dropped to just 2.8 percent in 2025, compared with 5.9 percent the previous year. Company executives admit that simply isn’t good enough. CFO Arno Antlitz called the year really challenging, though he told CNBC that Volkswagen is still holding its ground in Europe, and increased its EV market share to 27 percent.
Trimming The Fat
To get back to healthier numbers, the company is turning to a familiar corporate strategy. Cut costs, restructure operations, and spend money a little more carefully. That includes a potentially painful reduction in staff. Volkswagen already agreed to cut 35,000 jobs at its core brand in Germany, and further reductions across Porsche and the Cariad software division could bring the total to roughly 50,000 by 2030, Brussels Signal reports.
The ultimate goal is to push operating margins back up to somewhere between 8-10 percent, VW CEO Oliver Blume says. Until then, Volkswagen’s message is pretty straightforward. The industry is getting tougher, and even giants sometimes need to tighten their belts.