Major restructuring in response to declining sales
Europe’s largest automaker, Volkswagen, announced plans to cut 50,000 jobs by the end of the decade. The reductions, primarily in Germany, come as the company faces falling demand in China and North America, US tariffs, and uncertainty linked to the ongoing US-Israeli military action against Iran.
Volkswagen had previously agreed with German trade unions to reduce 35,000 positions by 2030 through retirements and other natural attrition. The new plan expands this restructuring in response to a darkening global business climate.
Profits fall sharply as challenges mount
The group reported a 54% drop in pre-tax profits to €8.9bn (£6.6bn), attributing the decline mainly to US tariffs and Porsche’s delayed transition to electric vehicles (EVs) amid weak demand. Porsche’s operating profit fell 98% to €90m in 2025.
CEO Oliver Blume said the Iran conflict has not yet disrupted Volkswagen’s supply chain but warned it could affect premium brands like Audi and Porsche, which have modest sales volumes but high margins.
Market pressures and EV strategy
Volkswagen has scaled back EV production targets, including at Lamborghini. The company cited challenges from macroeconomic conditions, geopolitical tensions, and increased volatility in commodity, energy, and foreign exchange markets.
In China, domestic competition has eroded Volkswagen’s market share. Blume announced the “largest product campaign in our history” in the country to regain customers and stabilise sales.
“After three intensive years of realignment within the Volkswagen Group, we are seeing tangible progress,” Blume said. “At the same time, we are operating in a fundamentally different environment.”
Also read: Middle Eastern countries cut oil production, according to Bloomberg
For more videos and updates, check out our YouTube channel
