Volkswagen Group said its first quarter operating profit fell 14.3% as US tariffs and stronger competition in China affected its performance and said that its current cost reduction measures are not sufficient.
For the three months to 31 March 2026, the German carmaker recorded an operating result of €2.46bn ($2.88bn), compared with €2.87bn in the same period last year.
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Sales revenue came in at €75.65bn, representing a 2.5% year-on-year (YoY) decline.
Earnings before tax dropped 28.4% to €2.23bn, while net earnings also fell 28.4% to €1.56bn.
Vehicle sales declined 6.9% from a year earlier to approximately 1.95 million units.
The company reported lower sales in China, down 20%, and North America, down 9%.
These declines were only partly balanced by increases in South America, up 3%, Western Europe, up 1%, and Central and Eastern Europe, up 7%.
Customer deliveries were approximately 2.05 million units, down 4% YoY.
Production slipped 1.7% to approximately 2.16 million units.
Headcount was 657,400 on 31 March 2026, compared with 662,900 at the end of 2025.
Results differed across the group’s brand divisions.
The Core brand group, comprising Volkswagen Passenger Cars, Škoda, SEAT, and Cupra, reported an operating result of €1.5bn, an increase of 38%.
Its operating margin was 4.4%, with optimised product costs and cost management more than offsetting tariff headwinds.
Volkswagen Group CEO Oliver Blume said: “The world is undergoing fundamental change – and we are aligning our strategy consistently. Wars, geopolitical tensions, trade barriers, stricter regulations, and intense competition are creating headwinds.
“In this challenging environment, we have managed to make tangible progress. In the Passenger Cars and Light Commercial Vehicles segment, operating profit is up by around 43% compared to the previous year.”
For the full year 2026, Volkswagen Group forecast sales revenue growth of between 0% and 3%, and an operating return on sales of between 4.0% and 5.5%.
It projected net cash flow for the automotive division at between €3bn and €6bn, while net liquidity is expected to be between €32bn and €34bn.
The company said its outlook assumes that the current tariff environment remains unchanged.
It also identified ongoing risks including macroeconomic uncertainty, geopolitical tensions, competitive intensity, and emissions regulation requirements.
