The German automotive conglomerate Volkswagen Group announced a sharp decline in earnings for 2025. The company's net profit fell by 44% to €6.9 billion (approximately $8 billion) from €12.4 billion in 2024. This marks the group's worst annual performance since 2016, at the height of the fallout from the "Dieselgate" scandal.
Chief Financial Officer Arno Antlitz stated in the company's press release that "2025 was punctuated by geopolitical tensions, tariffs and highly intense competition." Falling demand in its two largest export markets, the US and China, along with new US tariffs and rapidly improving domestic competition in China, were cited as key challenges.
The Volkswagen Group is also grappling with managing and judging the pace of the shift towards electric mobility. Targets and incentives frequently fluctuate and vary by region, while public demand remains lower than many politicians and industry leaders had hoped.
A major contributor to the downturn was the performance of Porsche, the group's key profit driver. The Stuttgart-based company's net profit was virtually wiped out, plummeting from €5.3 billion in 2024 to just €90 million in 2025. Volkswagen's annual report attributed this decline to "a fundamentally changed market environment in China, the US tariffs, the slower rise of electromobility and the one-off and special effects that are connected with it."
According to the works council, Porsche's decision late last year to extend production run times for combustion engine models resulted in a one-off financial hit of around €5 billion, while US tariffs led to lost revenues of approximately €3 billion. Porsche has struggled particularly with the rapid emergence of high-quality Chinese-made luxury and performance cars, which have become a serious rival to its premium sales in China faster than most in the industry anticipated.
Volkswagen CEO Oliver Blume attempted to emphasize positives, such as pointing to the comparatively strong recent performance of Volkswagen Group shares relative to the industry as a whole in his presentation aimed largely at shareholders. However, his own compensation for 2025 also decreased: his total pay, including his pension package and various performance-related payments, amounted to €7.4 million, a drop of around €3 million.
The company is planning 50,000 job cuts across its various brands by 2030. CEO Blume confirmed in his letter to shareholders that the company is adhering to job reduction plans hammered out with trade unions in recent months. These cuts are intended to be achieved primarily through job-sharing or part-time arrangements for older employees and voluntary severances, not redundancies.
By midday on Tuesday, Porsche shares were up around 2% and Volkswagen shares had risen by just over 2.5%. However, the losses had already been priced in by the market during a turbulent 2025. A Porsche share was worth about €20 more a year ago, and the same can be said for Volkswagen stock. In the longer term, both companies' share prices have more than halved over the past five years.
Source: www.dw.com