Volkswagen loses a third of its profit and drops its revenue guidance

Volkswagen generated a net profit of 3.1 billion euros in the first half of 2026, around 30.7 percent less than in the same period last year. In the second quarter the fall was sharper still at 32.9 percent to 1.54 billion euros.

The group has therefore corrected its revenue guidance for the current year. Instead of growth of up to three percent it now expects stable revenue at best and a fall of up to three percent at worst. The share lost three percent after the announcement.

Operating profit in the half year was 5.93 billion euros and therefore just under twelve percent below the previous year. Revenue stayed almost unchanged at around 158 billion euros. The operating return on sales fell from 4.2 to 3.8 percent.

The group is sticking to its return guidance of 4.0 to 5.5 percent for the full year. In the previous year the figure had been 2.8 percent.

The short version

• Net profit fell around 30.7 percent in the first half of 2026 to 3.1 billion euros.
• Instead of growth of up to three percent, stable revenue is now expected at best and a fall of up to three percent at worst.
• Deliveries in China fell by more than a third to 424,300 vehicles.

China falls by more than a third

The most important drag sits in China. Deliveries there fell by more than a third in the first half to 424,300 vehicles. The whole Chinese market shrank 20 percent.

Chief executive Oliver Blume pointed to more than 150 competitors and over 500 new models in the first half alone, which set off a sharp price war. That development is led by BYD and the electronics group Xiaomi, which has risen to become a serious vehicle maker within a short time.

Both are also pushing into Europe. According to management, Chinese manufacturers now reach more than eight percent market share there. In plug in hybrids, which have so far been exempt from tariffs, the share is even above 30 percent.

Worldwide Volkswagen delivered around 2.1 million vehicles, a fall of just under nine percent. Without China it would have been more than a year earlier according to the group.

Tariffs cost four to five billion euros a year

The second burden comes from the United States. Management puts the effect of the tariffs there at four to five billion euros a year, at rates of up to around 50 percent on individual imports from outside Europe.

Volkswagen is hit particularly hard because a considerable part of production takes place in Europe and Mexico and the vehicles have to be imported.

A comparison with an American manufacturer is worth making. Ford expects net tariff costs of better than one billion dollars, because a high share of its manufacturing sits in the country itself. Ford has raised its full year guidance twice in this environment, while Volkswagen had to cut its own.

Blume said the group had offset persistent and unavoidable burdens in the tens of billions of euros in the first half.

Electric orders rise more than 50 percent

On the other side stands the order position. Orders for fully electric vehicles in Europe were more than 50 percent higher in the second quarter than a year earlier. For the new small car family more than 70,000 orders came in within a few weeks.

That is exactly where the problem lies. The entry models carry thin margins. An order book made up mainly of cheap vehicles supports utilisation but not the return.

In the first quarter the group had cut overheads by almost one billion euros and achieved a net cash inflow of two billion euros. Blume nevertheless called the operating margin of 4.3 percent at the time far too low and said the planned cost reductions were not enough.

Guidance under reservation

The group explicitly points to several reservations. The guidance assumes that the current tariff situation holds. Possible effects of an escalation in the Middle East are not included.

Also not included are the consequences of the planned group restructuring and the sale of a majority stake in the industrial division Everllence, from which an inflow of 7.4 billion euros is expected.

Further risks are the need for restructuring, a possible cut in the dividend and the European rules on carbon dioxide emissions from 2030.

The average analyst price target stands at around 106 to 112 euros depending on the data provider. The consensus rating is still buy but has become more cautious.

Frequently asked questions

Why is the business in China collapsing

Chief executive Oliver Blume pointed to more than 150 competitors and over 500 new models in the first half alone, which set off a sharp price war. That development is led by BYD and the electronics group Xiaomi. The whole Chinese market shrank 20 percent.

What do the American tariffs cost

Management puts the effect at four to five billion euros a year, at rates of up to around 50 percent on individual imports from outside Europe. Volkswagen is hit particularly hard because a considerable part of production takes place in Europe and Mexico.

Why do the electric orders not help

Orders for fully electric vehicles in Europe were more than 50 percent higher in the second quarter than a year earlier. The entry models however carry thin margins. An order book made up mainly of cheap vehicles supports utilisation but not the return.

This analysis is for information only and is not investment advice.