Volkswagen Reports 53% Profit Drop in Challenging 2025

Volkswagen reported a 53% drop in operating profit for 2025 as tariffs, restructuring costs and market pressure weighed on results. See what the company revealed about its outlook.

Volkswagen Group closed the 2025 financial year with stable revenue and solid liquidity, yet the company’s profitability dropped sharply amid a difficult global environment for the automotive industry. Financial results presented at the annual media, analyst and investor conference in Wolfsburg showed that the operating profit of Europe’s largest carmaker fell by more than half.

The Group reported an operating result of €8.868 billion for 2025, compared with €19.060 billion a year earlier. This represents a 53.5% decline, with the operating margin falling to 2.8%. At the same time, sales revenue remained almost unchanged at about €321.9 billion, suggesting that the main pressure on the business came from shrinking profitability rather than declining demand.

Volkswagen attributes the decline to several factors. Among them are U.S. tariffs on imported vehicles, currency fluctuations, changes in the price and sales mix, and costs related to the adjustment of Porsche’s product strategy. Additional expenses linked to restructuring programs and the ongoing transformation of the Group also weighed on the result.

When excluding special effects, the operating result reached €13.8 billion, with an adjusted operating margin of about 4.6%. Even this level, however, is not considered sufficient by the company’s management. Chief Financial Officer and Chief Operating Officer Arno Antlitz stated that such profitability cannot be regarded as sustainable in the long run.

Despite the profit decline, Volkswagen’s financial resilience remains strong. Net cash flow in the Automotive Division rose to about €6.4 billion, while net liquidity at the end of the year stood at approximately €34.5 billion, largely unchanged from the previous year. These figures give the Group room to continue investing while intensifying its cost-reduction programs.

Vehicle sales also remained broadly stable. Volkswagen delivered around 9.022 million vehicles in 2025, almost matching the previous year’s level. Regional trends, however, varied significantly. Sales increased by roughly 5% in Europe and by 10% in South America, while they declined by about 12% in North America and 6% in China.

The sharpest deterioration came from the Sport Luxury segment, which includes Porsche. Operating profit in this group dropped dramatically from about €5.3 billion to just €90 million, and the operating margin fell from 14.5% to 0.3%. Volkswagen linked this decline to a combination of factors including a changed market environment in China, tariff-related costs, and a slower ramp-up of electric mobility.

In contrast, the Group’s core volume brands remained comparatively resilient. The Core brand group, which includes Volkswagen, Skoda and SEAT/Cupra, increased revenue to about €145.2 billion, while vehicle sales rose to roughly 5.125 million units. Skoda in particular delivered a strong performance.

At the same time, Volkswagen continued to push forward with its strategic transformation. The Group launched 30 new models in 2025, and demand in Europe showed signs of recovery. Vehicle order intake in the region rose by about 13%, driven largely by battery-electric vehicles, whose demand increased by roughly 55%. BEVs accounted for around 22% of the total order bank.

Looking ahead, Volkswagen plans to focus on expanding affordable electric mobility, strengthening its software and battery capabilities, and advancing autonomous-driving technologies. The company is also preparing what it describes as the largest product campaign in its history in China, where more than twenty new electric and electrified models are expected to be launched in the coming years.

The outlook for 2026 remains cautious. Volkswagen expects revenue to grow within a range of 0% to 3%, while the operating return on sales is projected to reach between 4% and 5.5%. Management warns that geopolitical tensions, trade restrictions, volatile commodity markets and intensifying global competition will continue to shape the environment in which the company operates.

In this sense, 2025 marked less a crisis of liquidity than a test of Volkswagen’s profitability. The Group retains strong financial foundations, yet it faces the challenge of cutting costs while continuing to invest heavily in the technological transformation of the automotive industry.