Europe’s largest carmaker, Volkswagen, is pushing ahead with plans to cut 50,000 jobs in Germany by 2030 after profits fell sharply, underlining ongoing pressure on the group.

The company said post-tax profits dropped by 44% to €6.9 billion in 2025, reflecting intensifying challenges across key markets and rising costs linked to industry transformation.

VW’s Chief Executive Oliver Blume told shareholders that the cuts would fall across the entire group, including Audi and Porsche. “We see that our business model of past decades no longer works in today’s world,” he said, citing regional market conditions, trade policy shifts, regulatory pressures and the group’s high cost base in Europe.

Around 120,000 employees are covered by Volkswagen AG’s company collective agreement, spanning major sites including Wolfsburg, Braunschweig and Hanover.

Volkswagen delivered roughly nine million vehicles worldwide in 2025, but the group is now being squeezed from multiple directions.

The cuts reflect a broader shift in the global automotive industry, where traditional European manufacturers are struggling to compete with lower-cost Chinese rivals while investing heavily in electric vehicles.

In the United States, tariffs introduced under Donald Trump have added cost pressure, with Volkswagen forecasting a 10% decline in North American sales.

In China, previously one of its most profitable markets, the group expects an 8% sales fall as domestic Chinese brands aggressively expand, both at home and increasingly into European markets.

Regional forecasts underline the scale of pressure in Volkswagen’s key markets, particularly in China and North America.

These regional declines reflect broader global trends, with demand weakening in key markets due to tariffs, competition and shifting consumer preferences.

The ongoing transition to electric vehicles has further compounded the strain, bringing significant restructuring costs that weighed heavily on 2025 results.

Together, these pressures highlight how traditional European carmakers are struggling to adapt to a rapidly shifting global market, as competition intensifies and the shift to electric vehicles accelerates.

Finance Director Arno Antlitz warned the group’s profit margin is “not sufficient in the long run” and that cost reduction remains a priority.

The company made around €1 billion in savings in 2025 and aims to cut costs by €6 billion by 2030.

For 2026, Volkswagen expects sales growth of between 0% and 3%, with operating margins of 4%–5.5%.

Oliver Blume, CEO Volkswagen Group, said: “2026 will see us bringing over 20 new models to customers around the world, covering all of the various drive systems. By the end of 2027, we will have launched 30 new all-electric, plug-in hybrid and range-extended models onto the Chinese market.”

Porsche also counts the cost

The pressure is also visible across Volkswagen’s premium brands.

Porsche, one of Volkswagen’s premium sports car subsidiaries, also reported a sharp decline in results. Group sales revenue fell to €36.3 billion in 2025 from €40.1 billion in 2024, while operating profit fell from €5.6 billion to just €413 million.

The company said the slump was driven largely by extraordinary charges of around €3.9 billion, including costs linked to a strategic product realignment, battery-related expenses and the impact of U.S. tariffs.

New Porsche chief executive, Michael Leiters said the brand was facing “difficult times” and was falling short of both market expectations and its own targets.

Around 4,000 redundancies have already been announced, with further cost-cutting measures currently under negotiation.

“We are unable to counter many of the global upheavals we are facing,” Leiters said. “We must therefore find a way to turn these challenges into opportunities for us,” he added.

The results underline the scale of the challenge facing Volkswagen as it attempts to cut costs and remain competitive in a rapidly evolving global automotive market.

For Europe’s largest carmaker, the task ahead is not only to reduce costs, but to prove it can adapt to intensifying competition and shifting demand across key markets.