Volkswagen's second-quarter operating profits have plummeted by 9.5% to €3.5 billion (£2.99 billion), underscoring the German automotive giant's struggles in a fiercely competitive global market. The company's dismal performance is largely attributed to a devastating sales slump in China, where it saw sales plunge by over 31% in the first half of this year.
While Europe and North America recorded positive sales growth during the same period, Volkswagen's global vehicle deliveries fell by 6.3%, with approximately 4.1 million vehicles sold in the first six months of 2026. The company's woes are particularly pronounced in China, where it has historically been a dominant player, but is now struggling to compete against rapidly expanding Chinese domestic manufacturers.
In response to these pressures, Volkswagen is accelerating its cost-cutting programme, which includes plans to axe up to 100,000 jobs globally – double the number previously agreed upon with unions. The majority of these cuts are expected to fall in administrative roles, while the company also intends to reduce its model line by up to half as part of efforts to streamline operations and boost efficiency.
Volkswagen's revised financial forecasts indicate a significant shift from earlier projections, with global sales now expected to fall by up to 3% this year. This downward revision is particularly notable given the company's previous forecast of a 3% increase on last year's €321.9 billion (£275.3 billion) revenue. The deteriorating market conditions are compounded by the increasing pressure from Chinese carmakers, which are sharply raising their exports and impacting European markets.
Oliver Blume, Volkswagen's chief executive, has highlighted the need for drastic restructuring to make the company "more innovative, faster, more attractive and robust". However, the extent of these changes, including job cuts and factory closures, is likely to face significant opposition from unions.