VW Slashes Its Margin Forecast to 1%, and It's Ugly
Volkswagen Group has reportedly cut its operating-margin forecast for 2026 from a range of 4 percent to 5.5 percent down to just 1 percent at best, and the fallout is going to reach every brand under the umbrella. The automaker that trades the "world's biggest" title back and forth with Toyota is now hitting the panic button.
A 1 percent margin is the kind of number that triggers structural upheaval, and Volkswagen is delivering. The group is reportedly planning to fundamentally restructure operations and shed 100,000 jobs by the end of the decade. A "gradual phase-out of the SEAT brand" is reportedly under consideration. Porsche, meanwhile, reportedly ran on a razor-thin margin of 1.1 percent in 2025 and has further trouble headed its way.
Group finance chief Arno Antlitz didn't dress it up. He told Bloomberg that "the market changes are profound and lasting" and "we have no time to lose."
The problems have piled up from every direction. U.S. tariffs, softening Chinese demand, rising competition from Chinese automakers, higher energy costs, and shareholders who still expect year-over-year profit growth. In Europe, legislation pushing all-electric cars is dragging down sales of profitable gas models while accelerating sales of far less profitable EVs.
The phrase to memorize is "component variety." Volkswagen reportedly plans to cut component variety by up to 75 percent on next-generation models, sharing the same parts across more vehicles to bring down manufacturing costs. That means not fitting a different door handle to every model in the catalog.
The company also reportedly wants to trim its lineup by as much as half. That's a hard turn for an automaker that built its dominance on having a car for everyone, from a modest hatchback to a Lamborghini supercar to a Bentley SUV.
Expect the "Volkswagen sells Porsche" rumors to resurface, though the group will likely cling to its fellow German crown jewel. Which pushes attention back toward Lamborghini as the more sellable candidate. Either way, there's a storm to weather, and no sign of the political and financial mess sorting itself out soon.
[Images: Volkswagen]
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GM ran on -2% for years. Luckily (?) you lot bailed them out. I suspect the German taxpayers are on the hook for this one, too big to fail probably applies.
I was always been interested in a Passat, but their quality and later in the final years their lack of power in that class of sedan was just unacceptable. The last time I even looked into one was back in 2020 for their new 8th generation. It was SO disappointing to learn that there was only the same lame 174hp turbo 2.0L I4 engine as what went in the 2021 Jetta. The 280hp V6 was dropped after 2019.
What's the point of getting the sporty R-Line trim with the same crappy weak engine? And a turbo that only got 174hp going in the 2020s? Hell my normally aspirated 1999 Nissan Frontier 2.4L I4 with a 5-speed manual had 143hp! I don't know what they were thinking. I do know that I am still happy with the 2022 252hp turbo I4 Honda Accord I ordered five years ago.