Volkswagen VWAGY reported a sharp decline in profitability in 2025, with operating profit falling to about €8.9 billion, representing a drop of 53% year over year. The decline was primarily due to tariffs and expenses related to a strategic shift at Porsche, which halted its electric transition last year amid weak demand. Full-year revenues remained largely stable at nearly €322 billion compared with €324.7 billion in 2024. Looking ahead, the automaker expects only modest growth, forecasting revenues to rise between 0% and 3% in 2026.
The company also provided a cautious profitability outlook. Volkswagen expects its operating margin to range between 4% and 5.5% in 2026. This follows a margin of 2.8% in 2025, which declined significantly from 5.9% recorded the previous year.
Per Arno Antlitz, COO and CFO at Volkswagen, 2025 was an extremely difficult year for the company as several factors weighed on earnings, including U.S. tariffs, currency-related effects and strategic adjustments within Porsche.
However, the company continues to maintain a solid position in Europe. Volkswagen slightly increased its market share in the region despite growing pressure from Chinese competitors. In the electric vehicle segment, the company performed even better, achieving a market share of more than 25%, which was higher than its share in the combustion-engine vehicle segment.
Volkswagen is also facing mounting pressure across major global markets. U.S. tariffs have cost the company billions, while intensifying local competition has weakened its position in China, the world’s largest car market. Geopolitical tensions in the Middle East are also creating uncertainty for luxury-car demand as Audi and Porsche struggle with weaker sales and tighter margins.
Amid these pressures, Volkswagen has intensified its cost-cutting efforts and restructuring initiatives. The company plans to reduce about 50,000 jobs in Germany by 2030 as part of a broader program to strengthen efficiency after profits declined sharply. Net profit fell 44% to about €6.9 billion in 2025, marking one of the company’s weakest results since the diesel emissions scandal nearly a decade ago.
Overall, the results underscore the difficult environment Volkswagen faces across key markets. With margins under pressure, the automaker is focusing on cost reductions and strategic adjustments to strengthen its financial performance.
Volkswagen AG Unsponsored ADR Price, Consensus and EPS Surprise
Volkswagen AG Unsponsored ADR price-consensus-eps-surprise-chart | Volkswagen AG Unsponsored ADR Quote
VWAGY’s Zacks Rank & Other Key Picks
VWAGY currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the auto space are RENAULT RNLSY, Magna International MGA and Strattec Security STRT, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RNLSY’s 2026 sales and earnings implies year-over-year growth of 14.4% and 176.3%, respectively. The EPS estimates for 2026 and 2027 have improved 34 cents and 18 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for MGA’s 2026 sales and earnings implies year-over-year growth of 2.3% and 18.7%, respectively. The EPS estimate for 2026 and 2027 has improved 75 cents and 79 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for STRT’s fiscal 2026 sales and earnings implies year-over-year growth of 2.1% and 16.2%, respectively. The EPS estimate for fiscal 2026 and fiscal 2027 has improved 85 cents and 48 cents, respectively, in the past 30 days.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
