Volkswagen Missed Its Profit Forecast, Deepening Its Crisis. CFO Says 4% Margin Is a ‘Wake-Up Call’

Volkswagen is accelerating one of the most sweeping restructurings in its history after reporting weaker-than-expected second-quarter earnings, with the company's chief financial officer acknowledging that the automaker must take additional steps to restore profitability while insisting plant closures and job cuts are not the preferred outcome.

Europe's largest carmaker reported an operating profit of 3.5 billion euros ($3.98 billion) for the April through June quarter, a decline of nearly 10% from the same period last year and well below analysts' expectations of 4.3 billion euros, according to LSEG data cited by CNBC.

The disappointing results prompted Volkswagen to abandon its previous forecast for modest revenue growth in 2026. Instead, the German automaker now expects sales revenue to decline by as much as 3% this year, underscoring the mounting pressure facing the global automotive industry.

The company is pursuing an aggressive cost-cutting campaign that could eliminate up to 100,000 jobs, roughly double the number previously discussed. The company is grappling with billions of euros in tariff-related costs while facing growing competition from Chinese automakers that have rapidly expanded both their domestic market share and exports into Europe.

Speaking to CNBC on Friday, Volkswagen Chief Financial Officer Arno Antlitz described the company's approximately 4% operating margin as a clear signal that additional restructuring is necessary. "This leads to this weight on our margin, a margin of roughly 4% is clearly a wake-up call that we have to do a second step of restructuring," Antlitz told CNBC.

Despite growing concerns over potential factory shutdowns, Antlitz emphasized that reducing the company's cost base does not automatically mean closing plants or eliminating jobs.

"There are various options. And look, I'm not looking for job cuts per se and I'm not looking for plant closures per se," he said when asked whether Volkswagen could repurpose manufacturing facilities, including by outsourcing capacity to the defense industry.
Instead, Antlitz said the company's priority is improving efficiency and making better use of its existing production network.

"We want to reduce our cost structure and we want to increase productivity and increase the capacity utilization of our plants. And if there are better options then we will obviously look into that," he said, adding that finding alternatives to factory closures would be "much better" for the company.

The comments come just weeks after CEO Oliver Blume warned employees that Volkswagen's costs are approximately 20% higher than those of comparable competitors, according to a memo widely reported by German media. Blume reportedly acknowledged that the company has yet to identify alternative uses for four German facilities that have previously been considered for closure.

The situation marks a significant shift for the automaker, which reached an agreement with labor unions in late 2024 that ruled out compulsory layoffs and factory closures in Germany through the end of 2030. However, deteriorating market conditions have intensified pressure on management to improve profitability despite those commitments.

Volkswagen is also facing challenges outside Europe. In April, the company announced it would end production of its ID.4 electric SUV at its Tennessee assembly plant, citing a difficult environment for electric vehicle sales in the United States.

Blume said the company has managed to offset billions of euros in what he called "continued unavoidable headwinds," but warned that the broader outlook for the automotive sector remains highly uncertain.

"At the same time, the environment for the automotive industry remains extremely challenging: geopolitical crises, trade conflicts, high regulatory requirements, volatile markets and intensified competition," Blume said in a statement accompanying the earnings release.

He added that Volkswagen is entering "the next phase of its transformation" despite what he described as an "unprecedented risk scenario," arguing that the company is doing so from "a position of strength" while preparing for long-term changes reshaping the global automotive market. Investors reacted negatively to the results. Volkswagen shares fell about 3% in Friday trading and have lost nearly 30% of their value since the beginning of the year,