Volkswagen to slash 50,000 jobs as profits plunge and tariffs bite

Core Viewpoint - Volkswagen plans to cut 50,000 jobs in Germany by 2030 due to a significant decline in profits, increased costs from electrification, and pressure from tariffs and weaker demand in key markets [1][1][1] Job Cuts and Restructuring - The job cuts will affect all brands within Volkswagen's German operations, including Audi and Porsche, as part of a broader restructuring effort [1][1] - This decision builds on a previous agreement to reduce over 35,000 roles by 2030, targeting savings of €15 billion (£12.4 billion) [1][1] - The company emphasizes the need to adapt its cost base to a fundamentally different business environment [1][1] Profits Hit by Tariffs and Weaker Demand - Volkswagen reported a 54% drop in pre-tax profits to €8.9 billion (£6.6 billion), attributing this decline to US tariffs and a costly strategy shift at Porsche [1][1] - Net profit after tax fell by approximately 44% in 2025, from €12.4 billion (£10.7 billion; $14.4 billion) to €6.9 billion (£6.1 billion; $8 billion) [1][1] - Porsche's operating profit plummeted 98% to €90 million due to a postponed transition to electric vehicles amid weak demand [1][1] Geopolitics, Energy Prices, and Premium Brands - Volkswagen warned that global geopolitical turbulence could negatively impact its outlook, citing potential trade restrictions and increased volatility in commodity and energy markets [1][1] - The company noted that while the US-Israeli military action against Iran has not disrupted its supply chain, it could dampen demand for premium brands [1][1] China's Strategy and EV Recalibration - Domestic competition has reduced Volkswagen's market share in China, prompting the announcement of "the largest product campaign in our history" to regain customers [1][1] - The group is moderating its electrification plans to align better with demand and infrastructure realities, with Porsche delaying parts of its EV transition [1][1] Outlook and Cost Focus - For 2026, Volkswagen forecasts a core profit margin between 4% and 5.5%, potentially lower than the 4.6% achieved in the current year [1][1] - The finance chief stated that the current margin is insufficient for the long term and emphasized a rigorous focus on cost reduction [1][1] - The company expects a recovery in the coming year, with cost discipline being central to restoring profitability [1][1]