Volkswagen has slashed its annual revenue outlook, piling pressure on the German auto manufacturer’s chief executive Oliver Blume to push through new cost-saving measures that include a record number of job cuts.
The world’s second-largest carmaker by volume said it expected sales to fall by up to 3 per cent in 2026, compared with a previous forecast of a 3 per cent increase on last year’s €321.9bn revenues, because of a slump in sales in China.
Between April and June this year VW’s operating profit declined by 9.5 per cent to €3.5bn, below analysts’ estimates of a small increase to €3.9bn.
The lower than expected figures will add pressure on Blume’s radical cost-cutting programme, which was rejected by VW’s supervisory board earlier this month because of strong opposition from union representatives.
Blume’s plans could see VW cut another 50,000 jobs globally — doubling the size of the headcount reduction already agreed by unions — and close production at four of its factories in Germany.
The programme, which includes halving the number of models and sale of non-core assets, would help the company “become even more innovative, faster, more attractive and robust — and sustainably ensure the Volkswagen Group’s success”, Blume said in a statement.
Despite initial opposition from union representatives to further job cuts, Blume said he expected an agreement to be reached on all elements of the plan this year.
“VW management is trying to walk the tightrope of reassuring investors while at the same time telling its workforce that the house is on fire,” Stephen Reitman, Bernstein analyst, said in a note, pointing to the company’s profit margin guidance which remained unchanged despite the cut to sales expectations.
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A weaker car market in China has added to the difficulties for western carmakers, whose sales have declined as domestic manufacturers have grabbed market share.
VW’s unit sales in China fell 31.6 per cent in the first half of 2026, with the trend accelerating as the year has worn on. By contrast, VW has seen unit sales increase in Europe and North America this year.
Chinese manufacturers had “sharply increased exports, adding pressure in Europe”, Blume said in a call, saying the rising competition was affecting the entire auto industry.
The pressure in Europe was “heavier than we expected”, he said. Chinese carmakers had made particularly significant inroads in the market for hybrids, Blume added, and he urged the EU to create a “level playing field” in the segment by increasing tariffs.
Weakness in the Chinese market and the impact of the war in Iran were behind BMW’s decision to slash its profit guidance last month. The difficult situation in China prompted BMW management to accelerate cost-saving measures, with the Munich-based carmaker expected to bring forward thousands of job cuts this year.