Volkswagen Shares Slide After 2026 Profit Outlook Cut

Volkswagen AG shares dropped sharply after the German automaker slashed its 2026 profitability forecast, citing weaker conditions in China, restructuring costs and a major impairment tied to Porsche AG.

Volkswagen shares fell 7.5%, extending losses after the company lowered its fiscal 2026 operating return on sales guidance to no more than 1%. The previous forecast called for a margin between 4% and 5.5%. Group sales revenue is now expected to reach approximately €315 billion, broadly matching the midpoint of Volkswagen's earlier guidance range.

The automaker expects special effects totaling roughly €10 billion to reduce operating profit this year. About €0.9 billion of those charges were already recorded during the first half of 2026. Excluding these items, Volkswagen estimates its full-year operating return on sales would be around 4%.

Volkswagen said deteriorating automotive market conditions, particularly in China, and a faster transition toward battery-electric vehicles have hurt performance. Developments at Audi and Volkswagen Passenger Cars have fallen short of the company's previous expectations.

Another significant factor is Porsche. Volkswagen plans to record a non-cash goodwill impairment of approximately €6 billion related to its Porsche business segment during the third quarter. The charge follows revised medium- and long-term assumptions from Porsche AG regarding its enterprise value, including a medium-term corridor of 10% to 15%.

Volkswagen also expects additional restructuring expenses linked to expanded early-retirement programs and the planned sale of Volkswagen Osnabrück GmbH. Combined with non-cash asset impairments at fully consolidated Chinese operations, these measures are projected to reduce second-half results by around €2 billion.

Despite the weaker Volkswagen earnings outlook, the company maintained its 2026 Automotive Division net cash flow forecast of €3 billion to €6 billion. Volkswagen also continues to expect automotive net liquidity of between €32 billion and €34 billion.