By Christina Amann and Christoph Steitz
BERLIN/FRANKFURT, Sept 18 (Reuters) – Volkswagen on Friday flagged €10 billion ($11.5 billion) in one-offs, mostly at struggling sports car brand Porsche, deepening a crisis at the world’s second-largest automaker that has already triggered the group’s biggest-ever restructuring.
The news raises questions over Porsche, which has been hardest hit by US tariffs and collapsing demand for foreign luxury brands in China, creating a perfect storm for the division that posted a profit margin of just 1.1% last year.
The impairments, flanked by a profit warning, come two weeks after the company agreed a major transformation deal with its shareholders, including another 50,000 job cuts, a simplification of its structure and possible plant closures.
Having heavily relied on China and the United States, Volkswagen has been squeezed by drastic changes in both market, including painful levies on US imports as well as a decline in the Chinese market, where it used to be the biggest player until 2024.
Shares in Volkswagen closed 5.6% lower on the announcement, while Porsche’s stock fell 3.3%. Volkswagen’s top shareholder Porsche SE also cut its outlook, sending its shares 4.9% lower.
New mid-term assumptions for Porsche, of which Volkswagen owns 75.4%, led to an impairment of some €6 billion, it said.
The profit warning deepens a crisis at Volkswagen, which earlier this month managed to agree far-reaching cuts with unions in the face of fierce competition from Asian rivals and stagnant demand in Europe.
“We have no time to lose,” finance chief Arno Antlitz said in an internal memo seen by Reuters, citing a 20% contraction in China, the world’s biggest auto market, Asian rivals muscling into Europe and rising sales of less profitable electric cars.
Volkswagen, which also includes the Audi, Skoda and Seat brands among others, now expects a profit margin of 1% at the most in 2026, having previously guided for 4.0% to 5.5%.
It warned of a “further deterioration in the market environment, especially in China, as well as an accelerated shift in demand in favour of battery-electric vehicles”.
This, it said, would lead to lower expectations for the Audi and Volkswagen passenger car brands.
($1 = 0.8721 euros)
(Additional reporting by Tristan Veyet; Editing by Kevin Liffey, Louise Heavens and Alexander Smith)
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