Volkswagen slashes 50,000 jobs after profits collapse by nearly half
Volkswagen Group profits slumped by almost half in 2025. Trade conflicts, difficulties in China and the change in strategy at Porsche are putting Europe's largest car manufacturer under pressure.
The Volkswagen group had a bruising year in profits and plans to cut 50,000 jobs in Germany by 2030 — a dramatic escalation of its cost-cutting programme after net profit slumped 44% to €6.9bn in 2025, the carmaker's worst result since the diesel emissions scandal nearly a decade ago.
The announcement, made by chief executive Oliver Blume in Wolfsburg on Tuesday, goes well beyond the 35,000 job reduction the group had already agreed with trade unions at the end of 2024.
Revenue stagnated at around €322bn, while operating profit almost halved to around €8.9bn, according to Europe's largest carmaker.
Chief financial officer Arno Antlitz cited a "challenging environment" of geopolitical tensions, new trade barriers and intensifying competition, particularly from China.
Volkswagen shares rose nearly 3.7% in Frankfurt on Tuesday morning, lifted by the broader market rally that followed Donald Trump's comments on Iran sanctions and a potential end to the conflict.
In 2015, Volkswagen was found to have installed software in millions of diesel vehicles designed to cheat emissions tests, making cars appear far cleaner than they were during testing — a scandal that wiped billions from the company's market value, triggered criminal prosecutions and cost the group upwards of €30bn in fines, settlements and recalls worldwide.
The current predicament is considered to be more damaging than the 2015 scandal.
Problems in China and the US
Although Volkswagen grew in Europe, this was not enough to compensate for declines in China and North America. The Group delivered around 8.98 million vehicles worldwide in 2025 — a decrease of 0.5%.
Trump's tariffs hit the US market for Volkswagen cars particularly hard, while changes to environmental regulations and the withdrawal of government subsidies have cooled demand for electric vehicles — putting pressure on planned projects including a new plant for electric pick-up trucks under the group's Scout brand.
The squeeze is equally acute in China, long Volkswagen's most important growth market, where local manufacturers including BYD, Geely and Nio are closing the technological gap and gaining market share.
In response, Volkswagen is doubling down on an "in China for China" strategy with local development and local supply chains, which analysts consider crucial to the group's long-term prospects.
The pain has been felt most acutely at Porsche.
The sports car brand suffered a sharp drop in Chinese sales while absorbing the costs of a strategic reversal.
Having long prioritised electric vehicles, Porsche is now pivoting back toward combustion engine models.
Inflated pay bonuses?
Operating profit collapsed from around €5.3bn in 2024 to just €90m last year.
The earnings collapse has not, however, dented executive pay and that is causing anger.
Despite the group's worst results in nearly a decade, members of the Volkswagen executive board are again receiving bonuses totalling millions, driven largely by net cash flow — the cash remaining after investments and running costs — which hit €6.4bn, the highest target level in the remuneration system.
According to media reports, total bonus payments to the management board came to around €13.6m.
Chief executive Oliver Blume received total remuneration of around €7.4m — slightly less than the previous year, partly due to a voluntary pay waiver.
Employee representatives are now demanding that the workforce share in the strong cash flow, with talks over possible special payments under way.
Hope for recovery in 2026
Despite the weak annual results, the Group has recently been somewhat more stable.
In the final quarter, business developed better than before. Volkswagen had previously reported a loss of more than €1bn in the third quarter due to special charges at Porsche.
The Group now expects profitability to improve again in 2026. The operating margin is expected to rise to between 4.0 and 5.5%, after falling to 2.8% in 2025.
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