By Dominic Chopping
Volkswagen backed guidance but said that it would double down on its transformation plans as global challenges intensify.
The German automaker reiterated its target for an operating margin of between 4% and 5.5% this year, up from the 2.8% it logged in 2025, with revenue landing between flat and 3% above last year's figure.
The company has an ambition to reach a margin of 8% to 10% in 2030.
However, it said that since it launched its transformation plan 18 months ago, the world has changed significantly. Tariffs have been imposed, competition in China continues to intensify, and Chinese players are increasingly exporting competitive pressure to Europe.
"In this environment, the planned cost reductions are not enough," said Chief Financial Officer Arno Antlitz. "We must fundamentally transform our business model and achieve structural, sustainable improvements."
This will include improving vehicle manufacturing costs, cutting overhead costs, boosting plant efficiency and speeding technology development and decision-making.
"This is what we will focus on in the coming months," Arno Antlitz said.
The automaker cut overhead costs by 1 billion euros ($1.17 billion) in the first quarter, but said Thursday it will now target additional cuts to its global production network to bring costs down further.
Having recently had global manufacturing capacity of around 12 million vehicles, it has already moved to remove 1 million units of capacity in China and 1 million in Europe. It is now targeting a reduction of a further 1 million units, with half in China and the other half in Europe.
This will help it lower plant costs by 20% while right-sizing its footprint as the company works to reduce the number of models and variants that it offers by a double-digit percentage, Chief Executive Oliver Blume said on a call.
The step up in its turnaround plan comes after it agreed a deal with unions late in 2024 to cut tens of thousands of jobs and slash billions of euros a year in costs as it grappled with high domestic costs, stuttering demand for electric vehicles and increasing competition from lower-cost Chinese EV makers.
Since then, headwinds have continued, with intensified competition in China, President Trump's tariffs and the discontinuation of EV subsidies in the U.S.
Around 50,000 jobs are due to be cut by 2030 across the Volkswagen group in Germany.
In this challenging market environment, the group still expects vehicle deliveries to customers this year to remain at last year's level.
The group, which houses a stable of brands that includes VW, Audi and Porsche, reported a 2.5% drop in revenue to 75.66 billion euros in the first quarter, with operating profit at 2.46 billion euros and an operating margin of 3.3%.
A FactSet analyst poll had expected an operating profit of 2.93 billion euros on revenue of 78.26 billion euros.
After recently announcing the end to production of its all-electric ID.4 model in the U.S. as part of a shift to high-volume cars, Volkswagen booked a first-quarter charge of 500 million euros related to the move.
It also reported a 600 million euro U.S. tariff impact in the quarter.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
April 30, 2026 05:32 ET (09:32 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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