Volkswagen Job Cuts Loom as Profits Fall on China Sales Slump 2026

Volkswagen job cuts of up to 100,000 positions loom as the German automaker reports a steep fall in profits and slashes its revenue forecast amid a deepening sales slump in China. The company now expects sales revenue to drop by up to 3% in 2025, reversing an earlier forecast of growth, as fierce competition from domestic Chinese manufacturers erodes its market share.

Volkswagen Profit Decline and Revenue Warning

Volkswagen’s operating profit fell 9.5% to €3.5 billion in the second quarter, missing analysts’ expectations of a slight increase to €3.9 billion. The company also warned that full-year revenue would decline, contrasting with earlier projections of a 3% rise from last year’s €321.9 billion. The profit drop is largely attributed to a 31% plunge in Chinese sales during the first half of the year, while deliveries in Europe and North America increased.

CEO Oliver Blume is pushing through a brutal restructuring program that includes shutting four factories in Germany—a plan that the supervisory board has so far rejected. The revised job cut target of 100,000 positions doubles the number previously agreed with unions and will primarily affect administrative roles across Volkswagen’s global operations. The company also plans to reduce its model lineup by up to half.

Impact of China Market Competition on Volkswagen

Chinese automakers have sharply increased exports and now dominate the domestic market with affordable electric vehicles. Volkswagen, which employs over 650,000 people across brands like Audi, Bentley, Skoda, Seat, Porsche, and Cupra, has been hit hard by this shift. In the first half of 2025, global deliveries fell 6.3% to about 4.1 million vehicles, with China accounting for the bulk of the decline.

Russ Mould, investment director at AJ Bell, commented: “The extent to which western carmakers are being squeezed out of the Chinese car market by domestic operators is laid bare by Volkswagen’s latest update.” The company’s struggles highlight the broader challenges facing traditional automakers as they transition to electric vehicles and compete with aggressive Chinese rivals.

Comparison: Volkswagen Sales by Region (First Half 2025)

The table above shows how China’s decline contrasts with growth in other regions, underscoring the severity of the market shift.

Key Takeaways from Volkswagen’s Job Cut Announcement

• Up to 100,000 jobs may be cut, mostly in administrative positions.
• Four German factories face potential closure due to restructuring plans.
• Volkswagen’s model lineup could be reduced by half to cut costs.
• China sales fell 31% in H1 2025, driving the profit downturn.
• The company’s global workforce of 650,000+ is under pressure as competition from Chinese EV makers intensifies.

FAQ

Volkswagen’s dramatic cost-cutting measures underscore the immense pressure on legacy automakers to compete in a rapidly evolving market. With Chinese rivals gaining ground and the shift to electric vehicles accelerating, the company’s actions may set a precedent for the entire industry.