The overall environment of the automotive industry is "extremely challenging" and Volkswagen lowers its full-year revenue forecast
(US stock code VWAGY) lowered its full-year revenue forecast on Friday, saying the operating environment of the entire automotive industry is "extremely challenging." The world's second-largest automaker now expects revenue in 2026 to be flat or down 3% from last year. VW had forecast revenue ranging from flat to 3% growth. The company maintains its operating profit margin target range of 4% to 5.5% unchanged, and its operating net cash flow and liquidity guidance has not been adjusted. Volkswagen's second-quarter results were mixed: the group's total revenue rose 2% year-on-year to 82.4 billion euros (equivalent to 93.9 billion U.S. dollars). Revenue growth was mainly driven by price increases in the financial services segment; vehicle sales fell 9.7% year-on-year to 2.04 million vehicles, and production fell 13.4% to only 2.01 million vehicles. Volkswagen's operating profit (approximately EBIT) fell 9.5% year-on-year to 3.47 billion euros (equivalent to US$3.96 billion); operating profit margin fell to 4.2% from 4.7% in the same period last year. Chief Executive Officer Oliver Bloom said in a statement: "We have strictly controlled costs, offsetting various ongoing unfavorable factors of tens of billions of euros. However, the automotive industry environment remains extremely challenging: geopolitical conflicts, trade frictions, stringent regulations, market volatility, and overall intensification of industry competition." The operating net cash flow of the automotive business in this quarter changed from a net outflow of 523 million euros (equivalent to 596 million U.S. dollars) in the same period last year to a net inflow of 1.17 billion euros (equivalent to 1.33 billion U.S. dollars). The improvement in cash flow was mostly due to the reduction of capital investment, reduction of taxes and working capital collection and payment time differences. The Chinese market continues to be under pressure. Volkswagen's overall global deliveries fell by 8.6% this quarter, with sales in China plunging 36.6% to only 424,300 vehicles; sales in North America increased by 7.7%, South America by 9.4%, and Europe by 2.5%. Chief Financial Officer Arnold Antlitz said that China's overall automobile market sales fell by 20% year-on-year, and warned that Chinese auto companies continue to increase exports, and competition pressure in the European market is rising. On the eve of the Beijing Auto Show on April 21, 2026, the Volkswagen Group held a media night, and CEO Oliver Bloom spoke on the spot. In addition, Volkswagen lists U.S. tariff barriers and strict regulations around the world as external factors that squeeze the profits of European car companies. Bloom pointed out that the three major factors that dragged down performance in the first half of the year were U.S. tariffs, one-time profit and loss items and the weakness of the Chinese market. Interestingly, the final net impact of tariffs in the first half of the year was slightly positive, increasing earnings by 100 million euros. This is due to Audi and Volkswagen hedging most of their costs through various tariff deductions and tax rebates. Volkswagen's 2026 performance forecast is based on maintaining the status quo under current tariff policies and that the geopolitical situation in the Middle East will not escalate further. Profit performance of sub-brands: Porsche's operating profit surged from 154 million euros last year to 692 million euros (equivalent to 789 million U.S. dollars); commercial vehicle subsidiary Traton's profit increased to 902 million euros (equivalent to 1.03 billion U.S. dollars); Volkswagen, Skoda, and Seat Cupra core passenger car segment profits fell from 234 million euros to 207 million euros (equivalent to 236 million U.S. dollars). The Volkswagen ID.UNYX 08 pure electric model was displayed at the Beijing event on April 8, 2026. Operating pressure has forced Volkswagen to restructure its product matrix, and many models are facing discontinuation of production. Volkswagen launched a reform plan called "Future Plan", which includes 12 supporting measures and anchors the long-term goal of 2030. Plan: Gradually streamline up to 50% of the models and focus resources on the most attractive market segments; at the same time, significantly simplify model configurations, reduce the types of various interior versions and optional packages by up to 75%, and reduce R&D and manufacturing costs. Bloom believes that the second-quarter data proves that the reform is initially effective. European new car orders increased by 12%, and orders for pure electric models increased by more than 50%. But he also warned that the public is encountering unprecedented multiple risks.