(de-news.net) – Citing special effects, weak Chinese demand, restructuring costs, and pressure from lower-margin electric vehicles, Volkswagen has significantly reduced its operating margin for 2026. Although the stock has dropped by almost 22% since the beginning of the year, revenue is predicted to reach 315 billion euros. By 2030, the company hopes to increase its operating margin to 8–10% through restructuring. In addition, Volkswagen is thinking about selling its Osnabrück plant and is recalling 208,724 cars in the US due to a steering component flaw.
In a sharp departure from its earlier projection of an operating return on sales of 4 to 5.5 percent, Volkswagen has substantially reduced its earnings outlook for the current fiscal year, now expecting an operating margin of only 1 percent. The downgrade reflects a combination of financial pressures that are weighing on the world’s largest automakers, including a significant impairment at Porsche, write-downs affecting the group’s operations in China, and expenses associated with its broader restructuring program. Together, these items account for approximately 10 billion euros in special effects incorporated into the revised outlook. At the same time, profitability is being squeezed by the continued weakness of the Chinese market and the increasing share of electric vehicles, which currently generate lower margins for the group.
For 2026, Volkswagen is projecting revenue of approximately 315 billion euros, representing a decline of about 7 billion euros compared with the previous year. The company has partly attributed the weaker outlook to the prolonged downturn in China, where declining vehicle sales are affecting both the Volkswagen and Audi brands and have resulted in additional impairments. The weakness of one of the group’s most important markets therefore continues to weigh on its financial performance. Meanwhile, stronger demand for electric vehicles in Europe is creating another challenge for margins. Because batteries remain significantly more expensive than the components required for conventional vehicles, Volkswagen earns less from electric models, increasing the financial pressure associated with the ongoing shift in its product mix. Following the revised forecast, Volkswagen shares fell 6.4 percent, making the stock the weakest performer in the DAX on the day.
Volkswagen also lost its position in the Euro Stoxx 50 following Friday’s market close, with the change scheduled to take effect on September 21. The decision reflects the company’s decline in free-float market capitalization after its share price fell by nearly 22 percent since the beginning of the year. Stoxx had announced the change in early September, making the index adjustment another visible consequence of the deterioration in Volkswagen’s market valuation. Although removal from the index does not directly alter the company’s underlying operations and does not prevent its shares from continuing to trade normally, membership in a major European benchmark can affect how prominently a company is represented in international capital markets. The exclusion could therefore reduce Volkswagen’s visibility among foreign investors even though its day-to-day business remains unchanged.
VW sets out restructuring plan to restore profitability by 2030
Volkswagen has nevertheless maintained that its removal from the index does not alter the group’s fundamental strength. At the center of its response is the restructuring plan unanimously approved by the supervisory board in early September, which is designed to reduce costs, simplify organizational structures and improve profitability over the longer term. The plan sets an operating-margin target of 8 to 10 percent by 2030, underscoring the scale of the improvement Volkswagen is seeking from its current position. The company expects a faster implementation of the measures, together with sustained improvement in its financial performance, to provide a basis for strengthening its share price over time. The broader restructuring effort thus forms part of Volkswagen’s response to the financial pressures reflected in its latest forecast.
Separately, Volkswagen is recalling 208,724 vehicles in the United States because of a defective steering-gear mounting bolt that could break and potentially result in a loss of steering control, according to the National Highway Traffic Safety Administration. The recall covers certain 2018 Tiguan and 2018–2019 Atlas vehicles, along with Audi Q3 models produced from 2019 through 2021. The action consequently affects vehicles from both Volkswagen and Audi across several model years, adding a separate operational issue to the financial and restructuring challenges confronting the group.
Volkswagen has also reached an agreement with Aurelius Capital and the state of Lower Saxony concerning the possible sale of its Osnabrück plant. The proposed transaction is intended to preserve the site over the long term, with Aurelius and Lower Saxony set to assume ownership of the facility together. Under the plan, the partners intend over the coming years to transform the site into a hub for security and defense solutions. The proposed change would therefore give the Osnabrück facility a new strategic role while forming part of the wider restructuring process facing Volkswagen.
