The German giant closed 2025 with the worst result in almost a decade. It is no wonder, because right now Volkswagen is in the middle of several open fronts, among them China’s pressure and USAwave transition to electricwhere it is putting special focus. But the context has not been the only reason.
The blow in figures. The Group had a profit of 6.4 billion euros in 2025, 44% less than the previous year. In fact, it is the lowest since 2016, the year of the diesel scandal. Total revenue remained stable at around €322 billion, but operating profit fell almost by half to €8.9 billion. On the other hand, the group’s operating margin stood at 2.8%.
Why is this happening? Context doesn’t help, but it’s not just context either. Volkswagen has had structural problems for years that the current crisis has amplified: your internal software it is expensive and slow; China, its largest market, it slips out of your hands; The Trump administration’s tariffs hit its sales in the US and Europe is buying fewer cars than before the pandemic, specifically some two million fewer vehicles per year than in pre-pandemic.
The adjustment plan. Oliver Blume, CEO of the group, communicated in his annual letter to shareholders that “in total, around 50,000 jobs will be eliminated before 2030 in the Volkswagen Group in Germany.” The cut exceeds 35,000 positions that had already been agreed with the unions at the end of 2024 within the restructuring pact ‘Zukunft Volkswagen’ (The future of Volkswagen). This agreement, signed with the IG Metall union and the works council, prohibits the reduction of staff and guarantees employment until the end of the decade, but in exchange it freezes salaries in 2025 and 2026 and reduces productive capacity by 734,000 units per year.
The company estimates that these measures can generate up to €15 billion in annual savings by 2030. The additional 15,000 positions now announced come from brands such as Audi and Porsche, and software subsidiary CARIAD.
What’s wrong with China. Volkswagen was the best-selling manufacturer in China for decades. In 2024 lost that position to BYD; in 2025 it fell to third place, also surpassed by Geely. The group’s total sales in the country fell 8% in 2025, and those of electric vehicles plummeted more than 44%. To answer, the group works with XPeng on a specific electrical architecture for the Chinese market, the CEA platform, which is now ready for series production. Blume described the process as transforming “an idea into cutting-edge architecture in just 18 months.”
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The software problem. One of the group’s most expensive burdens has been CARIAD, its internal software division in which it invested around 12 billion euros without the expected results. The group has pivoted, with CARIAD now primarily managing external alliances. The most important is the one it maintains with Rivian, the American manufacturer of electric vehicles, in which Volkswagen has committed 5.8 billion dollars.
Rivian’s technology, its zonal architecture and its software, will debut in the VW ID.1scheduled for 2027. Last week, Rivian CFO Claire McDonough told investors that the relationship is “very strong” and that work is progressing faster than VW could have done alone.
Porsche, the other source of tension. The Stuttgart brand, usually the most profitable of the group, has also been affected. Its commitment to electric power has cost it nearly 4.7 billion euros, a figure that has practically absorbed its entire operating profit. Sales in China have also suffered.
What’s coming now? “We can only achieve this if we continue to rigorously reduce costs. That is what we will focus on in the coming months,” counted the group’s CFO, Arno Antlitz. The group also is studying cuts of 20% in the costs of all its brands before the end of 2028. However, there are signs of improvement: the fourth quarter of 2025 was better than the previous ones, and the group foresees an operating margin of between 4% and 5.5% for 2026.
Cover image | Volkswagen
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was originally published in
Xataka
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Antonio Vallejo
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