Volkswagen has drastically cut its financial forecast for fiscal year 2026, now expecting Group Sales Revenue of approximately €315 billion and an Operating Return on Sales of up to 1%. This is a significant reduction from its previous forecast of 4.0% to 5.5%, and substantially below the average analyst expectation of 4.1%. The company projects a total negative impact on operating profit of around €10 billion due to several factors, with €0.9 billion already reported in the first half of 2026. Adjusted for these special effects, the operating return on sales would be about 4%.
The primary drivers behind this revised outlook include a non-cash impairment of approximately €6 billion on goodwill allocated to the Porsche business segment. This impairment resulted from Volkswagen AG updating its assumptions for Porsche's enterprise value after Porsche AG communicated its expected financial data. Furthermore, a deteriorating market environment, particularly in China where the market has slumped by 20%, and an accelerated shift in demand towards battery-electric vehicles are impacting earnings. These factors are specifically affecting the Audi and Volkswagen Passenger Cars brands, leading to performance falling short of original expectations.
In addition to the Porsche impairment and market challenges, Volkswagen anticipates around €2 billion in further restructuring expenses. These costs stem from the expansion of early retirement schemes and the planned sale of Volkswagen Osnabrück GmbH, tied to the "Future of Volkswagen" agreement reached in late 2024. The company's recent restructuring deal with unions could lead to 100,000 job cuts and the ending of vehicle production at four German plants. Analysts had previously estimated these restructuring costs could range from €7 billion to €10 billion. Non-cash impairments of assets in fully consolidated Chinese companies are also expected due to the Chinese automotive market's development. Despite these challenges, Volkswagen AG still expects Net Cash Flow in the Automotive Division to be between €3 billion and €6 billion, and Net Liquidity in the Automotive Division to be between €32 billion and €34 billion in 2026.
