Volkswagen AG has lowered its annual profit forecast and issued a warning regarding uncertainties linked to international trade restrictions and geopolitical tensions. The German automaker's CEO stated in a release that the company is operating in a "significantly different market environment," which necessitates a "consistent and disciplined approach to cost reduction." Volkswagen now anticipates an operating profit margin between 4% and 5.5% for 2026, compared to the 5.2% average forecast by analysts surveyed by Visible Alpha. Excluding restructuring expenses, the company's operating margin was 4.6% last year. The Chief Financial Officer remarked that the current level of profitability is "not sufficient to meet long-term development needs." Volkswagen plans to continue increasing investments in software, battery technology, and internal combustion engine models while aiming to "expand its regional footprint, with a strategic focus on the United States." However, the group also needs to "maintain intense cost-cutting efforts... and steadily improve profitability," alongside simplifying its complex organizational structure, which comprises numerous subsidiaries. Volkswagen reported revenue of 322 billion euros for 2025 and projects revenue growth of up to 3% for 2026. This downward revision of Volkswagen's profit expectations coincides with increasing pressure from U.S. tariff costs. The company's profit declined by over 50% last year, impacted by high investments in Porsche's electrification and significant U.S. tariff hikes. The automaker stated that U.S. tariff policies resulted in a total impact of 2.9 billion euros, stemming from customs expenses and reduced sales volumes. Its operating profit fell from 19 billion euros in 2024 to 8.9 billion euros, corresponding to a margin of just 2.8%. Although the margin recovered to 4.2% in the fourth quarter, this figure remains below the 2024 average, despite a 4.7 billion euro impairment charge related to the Porsche business in the third quarter.
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