Crisis-wracked Volkswagen warns of €10bn hit to profits

German automotive giant Volkswagen has announced it expects a €10 billion ($11.4 billion) hit to its annual profits, citing challenging conditions in China, issues at its Porsche subsidiary, and restructuring costs, according to AFP. Europe's largest carmaker, currently undergoing its largest-ever job cuts in the global automotive industry, has revised its profit margin forecast for 2026 to just 1%, down from an earlier estimate of between 4% and 5.5%.

Volkswagen, along with its luxury brands Audi and Porsche, has been grappling with the financial ramifications of the shift towards electric vehicles, along with a decline in demand and fierce competition within China, the world's most significant automotive market. The company's finance chief, Arno Antlitz, revealed during an interview on the company's internal network that demand for battery-electric vehicles, driven by geopolitical tensions and rising petrol prices, is currently generating substantially lower revenue compared to traditional internal combustion engine vehicles.