Volkswagen slashes sales guidance as Q2 profits sink

(Sharecast News) - Volkswagen Group has lowered its sales forecasts for the year, saying that it must take "swift and consistent" action to cut costs as industry challenges mount. The German auto giant, which earlier this month announced 100,000 job losses as it scales back production, said sales revenues are now expected to be flat to 3% lower than the €322bn generated in 2025, compared with a previous growth range of zero to +3%.

The firm blamed a multitude of challenges, including trade and geopolitical uncertainties, volatile commodity markets and heightened competition.

The company sold 2.043m vehicles in the second quarter, down 9.7% year-on-year, with first-half sales falling 8.4% to 3.997m. Sales revenues were up 2.0% at €82.44bn in the second quarter, while earnings before tax slumped 23.4% to €2.54bn.

In a statement, chief financial officer Arno Antlitz said the company's operating margin of 3.8% - up from 3.3% the year before - "remains too low and underlines the call to action".

"In an environment where the Chinese total market is down by 20% and Chinese competitors are increasing exports and thereby competitive pressure in Europe, the currently planned initiatives are not sufficient. We must accelerate efforts to structurally lower our cost base and sustainably improve our earnings quality," Antlitz said.

These efforts include improved vehicle cost structures, lower overheads, higher manufacturing efficiency, faster technology development and quicker decision-making processes.

"Therefore we need to significantly reduce complexity - in our product portfolio and platforms, in our equity portfolio, as well as in our leadership and decision-making structures. What matters now is swift and consistent implementation," he said.

VW shares were down 1.8% at €71.62 by 1321 BST, taking the year-to-date fall to nearly 33%.