Volkswagen struggles deepen as quarterly profit drops

Volkswagen’s future is at risk without additional cost-cutting measures, the struggling German automotive giant warned on Thursday, after reporting a sharper-than-expected decline in profits as mounting headwinds continue to pressure the company.

The carmaker is facing difficulties stemming from intense Chinese competition, US tariffs, and uneven demand for electric vehicles. It already has plans to eliminate 50,000 jobs across all its brands in Germany by 2030, News.Az reports, citing AFP.

Between January and March, the group’s net profit fell 28 percent to 1.56 billion euros ($1.8 billion), while revenues declined to 76 billion euros, both figures worse than analysts had anticipated.

“The cost reductions planned so far are not enough,” said Volkswagen chief financial officer Arno Antlitz.

“We need to fundamentally change our business model and achieve structural, sustainable improvements — in all areas and at all levels. If we fail to do that, we will jeopardise our future.”

Volkswagen, whose portfolio of 10 brands includes Audi, Seat, and Skoda, will need to adjust its production capacity and “work on further optimising costs at our plants,” he added.

Antlitz also warned that Chinese manufacturers are not only competing in their domestic market but are also steadily increasing their market share in Europe.

He noted that automakers such as BYD have become strong competitors to Volkswagen in China, which has traditionally been a crucial source of profit for the German manufacturer, particularly in the electric vehicle segment.

In addition, Antlitz said US President Donald Trump’s tariffs, introduced a year ago, are adding approximately four billion euros in annual costs for the group.

Volkswagen delivered just over two million vehicles in the first quarter, a four percent decrease compared with the same period last year.

Deliveries in China fell by 15 percent overall, while electric vehicle deliveries dropped sharply by 64 percent. In North America, deliveries declined by 13 percent.

The company is forecasting sales growth of between zero and three percent in 2026, with a core profit margin expected to range between four and 5.5 percent.

Volkswagen said that possible impacts from the war in the Middle East were not included in its forecasts, as they cannot be reliably assessed.

The company’s difficulties reflect a wider slowdown affecting Europe’s largest economy, particularly its traditional manufacturing sector.

Volkswagen’s annual profits fell to their lowest level in nearly a decade in 2025.

Chief executive Oliver Blume said on Thursday that Volkswagen must align its strategy with a world that is “undergoing fundamental change.”

“Wars, geopolitical tensions, trade barriers, tighter regulation, and intense competition are creating headwinds,” he said.

News.Az 

By Nijat Babayev