Volkswagen Group Posts €5.9 Billion Q3 Operating Loss, Puts All Efforts Into Restoring Profitability

Weakness in China and U.S. tariffs weigh on results
Targets €31 billion in cost savings

The Volkswagen Group recorded a large operating loss in the third quarter of 2026, facing worsening profitability. The result reflected a combination of weakness in the Chinese market, U.S. tariffs, and pressure on profitability from expanding electric vehicle sales.

The Volkswagen Group said revenue for January-September 2026 fell 2.2% year on year to €233.4 billion, from €238.7 billion. Operating profit for the same period fell 98.7%, to €7.1 billion from €5.4 billion a year earlier. The operating margin was 2.3%.

The weakness was particularly pronounced in the third quarter. Revenue was €75.2 billion, down 6.3% from a year earlier, while the operating loss reached €5.9 billion. The loss widened from €1.3 billion in the same period last year.

A key reason for the deterioration was €8.7 billion in special items, of which €7.8 billion was recognized in the third quarter. These included a non-cash impairment loss of €6.4 billion on Porsche goodwill, an approximately €1.0 billion non-cash impairment adjustment to assets of consolidated subsidiaries in China, and costs related to the planned sale of the Volkswagen plant in Osnabrück.

Excluding special items, operating profit for January-September was €8.8 billion, with an operating margin of 3.8%. Weakness in the Chinese market, intensifying global price competition, and a higher share of sales from relatively less profitable electric vehicles also weighed on results.

Vehicle sales also declined. The Volkswagen Group sold 5.88 million vehicles in January-September 2026, down 10.6% from 6.58 million in the same period last year. Customer deliveries fell 9.0% to 6.01 million. The contraction of the Chinese market, trade restrictions, and tariffs all had an impact. However, excluding its joint ventures in China, the decline in vehicle sales was limited to around 1%.

By contrast, demand for electric vehicles in Europe increased. New orders in Europe totaled 3.00 million in January-September, up approximately 4% year on year. New orders for battery electric vehicles (BEVs) rose 39%. The order backlog awaiting delivery in Europe stood at approximately 1.10 million vehicles, up 11% from the end of last year, with electric vehicles accounting for around 40% of the total. The urban electric vehicle family in particular secured approximately 150,000 orders.

Cash flow improved. Net cash flow in the automotive division rose 145% to €4.4 billion, from €1.8 billion a year earlier. Lower investment and portfolio adjustments contributed to the increase. At the end of September, net liquidity in the automotive division was €33.0 billion, down from €34.5 billion at the end of last year, but remained at a stable level.

To improve profitability, the Volkswagen Group plans to cut costs under its "Future Plan." It aims to simplify its model lineup and organizational structure, lower vehicle costs and overhead, improve the efficiency of its production plants, and accelerate the pace of technology development. The group targets cost savings of approximately €31 billion through these measures.

Arno Antlitz, Chief Financial Officer (CFO) and Chief Operating Officer (COO) of the Volkswagen Group, said, "Our results for January-September this year show that the Volkswagen Group cannot afford to lose a moment and must act swiftly and decisively. What matters now is swift and consistent execution."

The Volkswagen Group forecast full-year 2026 revenue of approximately €315 billion and an operating margin of up to 1%. It projected an investment ratio of 11-12% for the automotive division and net cash flow of €3 billion to €6 billion. International trade restrictions, geopolitical tensions, intensifying competition, and fluctuations in raw material and energy prices and exchange rates were cited as sources of uncertainty for the outlook.

This content was produced with the assistance of AI translation services.