Volkswagen AG endured a year of severe profit decline and plans to eliminate 50,000 positions in Germany by 2030—a sharp escalation of its cost-cutting initiative. This follows the group's net profit for 2025 plummeting by 44% to €6.9 billion, marking its weakest performance since the "dieselgate" scandal nearly a decade ago.
The plan, announced by CEO Oliver Blume on Tuesday in Wolfsburg, significantly exceeds the previously agreed reduction of 35,000 jobs negotiated with labor unions by the end of 2024.
As Europe's largest automaker, Volkswagen's revenue stagnated at approximately €322 billion last year, while its operating profit was nearly halved, falling to around €8.9 billion.
CFO Arno Antlitz attributed the results to a "challenging external environment," citing geopolitical tensions, new trade barriers, and intensifying competition, particularly from Chinese manufacturers.
Buoyed by a broader market upswing triggered by remarks from Donald Trump concerning Iran sanctions and a potential ceasefire, Volkswagen's share price rose nearly 3.7% on Tuesday morning in Frankfurt trading.
In 2015, Volkswagen was found to have installed specialized software in millions of diesel vehicles to cheat on emissions tests, making the cars appear far cleaner during testing than they were in real-world use. The scandal erased billions from the company's market value, led to criminal investigations, and has cost the group over €30 billion in fines, settlements, and recall expenses globally.
Volkswagen's current operational challenges are considered more damaging than the 2015 scandal.
Setbacks in China and the US Although Volkswagen achieved growth in the European market, this was insufficient to offset declining sales in China and North America. In 2025, the group's global vehicle deliveries totaled approximately 8.98 million units, a decrease of 0.5% year-on-year.
Trump's import tariffs hit Volkswagen particularly hard in the US market. Concurrently, adjustments to environmental regulations and the phasing out of government subsidies have cooled demand for electric vehicles, putting pressure on planned projects such as the new factory for the Scout brand's electric pickup truck.
Significant pressure also exists in China, long Volkswagen's most critical growth market. Domestic automakers like BYD, Geely, and NIO are narrowing the technology gap and steadily increasing their market share.
In response, Volkswagen is accelerating its "in China, for China" strategy, focusing on local research and development and local supply chains. Analysts view this as crucial for the group's long-term prospects.
Porsche has been the most visibly impacted. The sports car brand experienced a significant sales decline in China while also bearing the costs associated with a strategic shift.
Porsche, which had long focused on electric vehicles, is now pivoting back towards internal combustion engine models.
Executive Bonuses Spark Controversy Operating profit at Porsche plummeted from approximately €5.3 billion in 2024 to just €90 million last year.
However, the massive loss did not affect executive compensation, which has caused discontent.
Despite the group posting its worst results in nearly a decade, members of Volkswagen's management board again received bonuses totaling millions of euros. The bonuses are primarily calculated based on net cash flow—the cash remaining after deducting investments and operating costs—which reached €6.4 billion, hitting the highest target tier in the compensation system.
According to media reports, the total bonus pool for the management board was around €13.6 million.
CEO Oliver Blume's total remuneration was approximately €7.4 million, slightly lower than the previous year, partly due to a voluntary salary reduction.
Employee representatives are now demanding that rank-and-file staff also share in the strong cash flow, and negotiations regarding a special bonus are underway.
Recovery Expected in 2026 Despite the weak full-year performance, the group's recent operational situation has stabilized.
Business performance in the fourth quarter showed improvement compared to earlier periods. Volkswagen had previously reported a loss exceeding €1 billion in the third quarter, impacted by special expenses related to Porsche.
The group now anticipates a return to improved profitability in 2026. After falling to 2.8% in 2025, the operating profit margin is forecast to recover to a range between 4.0% and 5.5%.
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