Global turmoil hits Volkswagen as automaker announces 50,000 job cuts
Europe’s largest automaker, Volkswagen, is set to shed 50,000 jobs by the end of the decade, as it faces declining sales in China and North America and punitive US tariffs imposed by Donald Trump.
The 10-brand group, whose luxury subsidiaries Porsche and Audi are also under pressure, stated that the jobs would be cut in Germany, impacting the entire group, as part of a restructuring drive in response to the worsening global business climate.
The group had already reached an agreement with German trade unions at the end of 2024 to reduce 35,000 jobs by 2030, partly through natural attrition from retirement and other staff departures.
Volkswagen disclosed the updated plans as it reported a 54% drop in pre-tax profits. The group has been scaling back its targets for electric vehicle (EV) production in recent months, including at its Italian supercar manufacturer, Lamborghini.
As the US-Israeli military action against Iran stirs market uncertainty and raises energy prices, Volkswagen warned that global turbulence would negatively affect its outlook.
"Challenges are expected particularly from the macroeconomic environment, uncertainties regarding restrictions in international trade, and geopolitical tensions," the company stated.
This would increase "competitive intensity" and volatility in "commodity, energy, and foreign exchange markets," it said in a statement.
The Volkswagen Group chief executive, Oliver Blume, said later that the Iran war was not impacting Volkswagen’s supply chain but could affect demand for its premium marques Audi and Porsche.
"We are simply seeing how volatile and fragile our world is, with new issues arising every month," Blume said, highlighting a potential drag on sales from the conflict in the region, where volumes are modest but margins high.
The decline in profits, to €8.9bn (£6.6bn), was largely "attributable to US tariffs," the company reported, along with a costly strategy shift at Porsche, which has delayed its transition to EVs due to weak demand.
Porsche’s operating profit nearly disappeared in 2025, plummeting by 98% to €90m.
Even before Trump imposed tariffs on foreign carmakers last year, Volkswagen was grappling with flat demand in Europe and the costs of investing in EVs despite disappointing demand and inadequate infrastructure.
Domestic competition eroded the group’s share in China, the world’s largest car market. Blume announced "the largest product campaign in our history" there in an effort to win back customers.
"After three intense years of realignment within the Volkswagen Group, we are seeing tangible progress," Blume said. "At the same time, we are operating in a fundamentally different environment."
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