The global automotive industry is facing turbulent times, and Volkswagen is no exception. The company recently reported a dramatic 44% drop in net profits for 2025, with after-tax gains plummeting to €6.9 billion (approximately $8 billion) from €12.4 billion in 2024, marking its worst annual performance since the “Dieselgate” scandal in 2016.
Chief Financial Officer Arno Antlitz noted in a company press release, “2025 was punctuated by geopolitical tensions, tariffs and highly intense competition.” These factors have prompted Volkswagen to plan 50,000 job cuts across its brands by 2030, as it battles declining demand, increasing competition in China, and new US tariffs.
Porsche’s Challenges Impact Volkswagen’s Profits
Porsche, a key performance brand for Volkswagen, experienced a significant downturn, with net profits nearly wiped out. The company reported just €90 million in profits compared to €5.3 billion in 2024. Volkswagen cited a changed market environment in China, US tariffs, and slower electromobility growth as contributing factors.
A financial blow occurred when Porsche extended production for combustion engine models, resulting in a €5 billion hit. Additionally, US tariffs caused a €3 billion revenue loss. Porsche now faces stiff competition from high-quality Chinese-made luxury cars, challenging its market dominance in China.
Volkswagen’s Broader Financial Picture
Despite Porsche’s struggles, other areas of Volkswagen performed relatively better. The Group delivered 8.98 million vehicles, a slight dip of 0.5% from 2024, and reported total revenue of €322 billion, down 0.8%. Volkswagen’s operating profit rose slightly to €2.61 billion, while Audi’s operating profit decreased to €3.4 billion.
- The Group’s operating profit margin dropped to 2.8% but is expected to rebound in 2026.
- The company experienced a €1 billion loss in the third quarter of 2025 but saw performance rebound in the final quarter.
Strategic Workforce Reductions and Executive Compensation
Volkswagen CEO Oliver Blume confirmed plans to cut 50,000 jobs by 2030, focusing on voluntary severances and job-sharing to minimize redundancies. The majority of these cuts will occur at Volkswagen, with Audi and Porsche also reducing their workforce.
Blume’s compensation decreased in 2025 due to the company’s performance, with total earnings of €7.4 million, down by €3 million. His predecessor, Herbert Diess, received €9 million, remaining the top-paid manager until his retirement in October 2025.
In the stock market, Porsche’s shares rose by 2%, and Volkswagen’s increased by 2.5% as of midday Tuesday. However, both companies have seen their shares more than halve over the past five years, reflecting broader industry challenges.
Original Story at www.dw.com