Volkswagen plunges! Profit forecast for 2026 significantly lowered, Porsche writes down €6 billion

Volkswagen Group once again lowered its full-year profit forecast, mainly due to Porsche business impairment, increased competitiveness from Chinese carmakers, and rising restructuring costs.

On September 18 (local time), Volkswagen Group issued an announcement stating it expects group sales revenue of around 315 billion euros in 2026, with a maximum operating sales return of only 1%, significantly below analysts’ expectation of 4.29% and far lower than the previous forecast of 4% to 5.5%.

The company expects special items for the full year to impact operating profit by about 10 billion euros, of which approximately 6 billion euros comes from non-cash impairment of Porsche business goodwill.

Impacted by the downward revision of performance expectations, Volkswagen’s share price fell as much as 7.5% on Friday, ultimately closing down 5.6%; Porsche fell 4.9%, and the European automobiles and components sector dropped 3.4%.

Porsche impairment of 6 billion euros

The most notable aspect of this revised forecast is the impairment of approximately 6 billion euros in Porsche’s business goodwill.

Volkswagen stated that Porsche has updated its medium- and long-term plans, and the company has adjusted its medium- and long-term assumptions for assessing corporate value accordingly and conducted a goodwill impairment test for Porsche’s business. As a result, a non-cash impairment of about 6 billion euros is expected, which will be mainly recorded in the third-quarter operating profit this year.

Porsche’s previously announced medium-term operating profit margin target was 10% to 15%. Volkswagen noted that a change in Porsche’s business profit outlook is one of the main reasons for this impairment.

Porsche is facing dual pressure from U.S. tariffs and a decline in demand for overseas luxury brands in China, placing significant strain on its profitability.

It’s important to note that goodwill impairment is a non-cash expense and does not directly result in an outflow of cash of the same scale. Therefore, this downward adjustment in Volkswagen’s profit forecast does not entirely equate to a deterioration of cash flow.

Chinese carmakers gain competitiveness

Besides the Porsche impairment, increased competitiveness of Chinese automakers is another major pressure point for Volkswagen.

Volkswagen said that in the Chinese market, consumer demand is quickly shifting towards pure electric vehicles, causing actual operating performance to fall short of previous expectations, with Audi and Volkswagen passenger car brands particularly affected.

At the same time, Chinese electric vehicles are also entering the European market in force, further intensifying competitive pressure in the domestic market.

As Chinese automakers like BYD expand their competitive edge in the electric vehicle sector, Volkswagen has to deal not only with pressure on sales and market share but also the need to invest more funds in the electrification transition process.

Volkswagen also clarified this time that accelerating demand for pure electric vehicles is one of the factors affecting the operating profit outlook. The profit margins of electric models are generally lower than similar internal combustion engine vehicles, and the rapid switch in sales structure toward EVs is diluting overall profits, while cost reduction measures in Germany have yet to be fully implemented.

Rising restructuring costs

In addition to the Porsche impairment, Volkswagen expects about 2 billion euros in other one-off negative impacts in the second half of this year.

The company said this portion of costs includes expanding early retirement plans, a planned sale of the Osnabrück plant, and non-cash impairments of assets related to the Chinese market.

Volkswagen had previously launched a large-scale restructuring plan. According to a previous article by Wallstreetcn, Volkswagen plans to halve its model lineup over the next 10 years, cut an additional 50,000 jobs, and with earlier reductions, the group’s total job cuts will reach 100,000.

Volkswagen Group CFO and COO Arno Antlitz stated that these special items are expected to impact operating profit by about 10 billion euros this year, with approximately 9 billion euros to be recognized in the second half.