Volkswagen announces exceptional costs of 10 billion euros and reduces its estimated profit margin for 2026 to no more than 1%

Volkswagen warned that it will incur exceptional costs of up to 10 billion euros and drastically lowered its estimate for profitability in 2026, amid problems at Porsche, declining demand in China, and pressure in the electric vehicle market.

The automaker now estimates a profit margin of no more than 1%, compared with the previously forecast range of 4%-5.5%. Analysts had expected an average margin of 4.1%. Approximately 6 billion euros of the adjustments are related to the new outlook for Porsche, 75% owned by Volkswagen.

The sports brand is affected by U.S. tariffs and declining demand for foreign luxury cars in China. Porsche recorded a profit margin of just 1.1% last year.

The new warning comes two weeks after the approval of a broad restructuring plan, which includes up to 50,000 job cuts, the simplification of the group’s structure, and possible plant closures.

Chief Financial Officer Arno Antlitz cited the 20% contraction of the Chinese market, the expansion of Asian rivals in Europe, and buyers’ shift toward less profitable electric cars.

Investors reacted negatively: Volkswagen shares fell 5.6%, Porsche shares fell 3.3%, while Porsche SE lost 4.9%.