Volkswagen Slashes 2026 Profit Guidance to Near Zero on €10 Billion Porsche and China Hit

Since Volkswagen's supervisory board agreed earlier this month to double planned job cuts to 100,000 positions, the company has now delivered the financial reckoning that deal was meant to address.

Volkswagen said Friday, September 18, that it now expects a 2026 operating return on sales of no more than 1%, down sharply from its previous guidance of 4% to 5.5%, according to Bloomberg and Quartz. The company also cut its full-year revenue forecast to about €315 billion, from €321.9 billion in 2025.

Shares fell as much as 7.5% intraday, the biggest drop in a year, before closing down 5.5% to 5.6%, according to Quartz and Invezz. The selloff spread to BMW, Mercedes-Benz, Ford Motor Co. and Stellantis, per Bloomberg and Invezz.

Where the €10 Billion Went

Volkswagen said roughly €10 billion in one-time charges will hit this year's results. The biggest piece, €6 billion, is a non-cash goodwill impairment tied to revised long-term assumptions for Porsche AG, in which Volkswagen holds a 75.4% stake, according to Quartz and TTNews.

The remaining roughly €2 billion covers early-retirement provisions, costs from the planned sale of the Osnabrück plant, and impairments tied to Volkswagen's Chinese joint ventures, according to TradingView and share-talk. Volkswagen said €900 million of the total already showed up in first-half results, with most of the rest landing in the third quarter.

Strip out the special charges and Volkswagen says its underlying operating margin would still run around 4%, per TTNews. That's the company's argument that this is a writedown problem, not solely an operations problem. But investors traded on the headline number, not the footnote.

China Keeps Getting Worse

China's overall car market has shrunk more than a fifth through August, according to Invezz, hit by an extended real estate crisis weighing on consumer spending. Volkswagen's China sales fell 20% in the first half of 2026 alone, the company disclosed in July.

Chief Financial Officer Arno Antlitz, in an internal memo obtained by Reuters and cited by Quartz, pointed to China's market shrinking by 20%, Asian manufacturers gaining ground in Europe, and thinner-margin EV sales eating into profitability. "We have no time to lose," Antlitz wrote.

Volkswagen's own numbers back that up. First-half revenue came in at €158.1 billion, but operating profit fell 11.6% to €5.9 billion, an operating margin of 3.8%, already below the low end of prior guidance before Friday's cut, according to Invezz.

A Familiar Pattern Now Four Cuts Deep

Friday marks the second guidance cut of 2026 and the fourth since the start of 2025, according to TradingView. Volkswagen's own language, that this is a repeat problem rather than an isolated shock, undercuts any read of this as a one-off writedown.

The faster-than-expected shift toward battery-electric vehicles in Europe is compounding the China damage. EV orders in Europe rose more than 50% in the second quarter, per Invezz, but battery-powered models carry thinner margins than combustion vehicles, and Volkswagen said that mix shift is hitting its core Volkswagen passenger-car and Audi brands hardest.

The Epoch Times, drawing on European Commission data and Renault Group's own public statements, frames this as a structural European problem, not just a Volkswagen one. The EU auto sector supports roughly 13 million jobs and 7% of EU GDP, and the European Commission itself has called the industry's competitive position a "critical turning point." Pierre-Olivier Essig of AIR Ltd told the outlet Europe should double down on luxury and performance niches where it retains an edge, warning that without targeted tax relief or subsidies for domestic manufacturers, Europe risks becoming "a service-only country." That's one argument. Volkswagen's own writedown on Porsche, its luxury flagship, is a live test of whether that niche is actually holding up.

Porsche is scheduled to hold a capital markets day on October 7 to set updated medium-term targets, and Volkswagen's own writedown appears tied to that internal reassessment, according to TTNews. Volkswagen reports full third-quarter results on October 29, when investors will find out whether the €10 billion in charges was the bottom or just the latest floor that gives way.