Europe’s biggest carmaker, Volkswagen, will cut 50,000 jobs by the end of the decade as it faces falling sales in China and North America and punitive tariffs imposed by Donald Trump in the United States.
The ten-brand group, whose luxury subsidiaries Porsche and Audi are also under pressure, said jobs would disappear in Germany, affecting the entire group, as part of a restructuring drive in light of the increasingly gloomy global business climate.
The group had already reached an agreement with German unions at the end of 2024 to eliminate 35,000 jobs by 2030, partly due to natural attrition due to retirement and other personnel departures.
Volkswagen revealed the updated plans by announcing a 54% drop in its pre-tax profits. The group has been reducing its electric vehicle (EV) production targets in recent months, including at its Italian supercar maker, Lamborghini.
As US-Israeli military action against Iran stokes market uncertainty and drives up energy prices, Volkswagen warned that global turbulence would negatively impact its prospects.
“Challenges are expected, in particular, from the macroeconomic environment, uncertainties regarding restrictions on international trade and geopolitical tensions,” the company said.
This would increase “competitive intensity” and volatility in the “commodity, energy and currency markets,” it said in a statement.
The CEO of the Volkswagen Group, Oliver Blume later said that the Iran war was not affecting Volkswagen’s supply chain, but could affect demand for its premium brands Audi and Porsche.
“We are simply seeing how volatile and fragile our world is, with new problems emerging every month,” Blume said, pointing to a possible drag on sales due to conflict in the region, where volumes are modest but margins high.
The drop in profits, to €8.9bn (£6.6bn), was largely “attributable to US tariffs”, the company said, as well as a costly change of strategy at Porsche, which postponed its transition to electric vehicles due to weak demand.
Porsche’s operating profit almost disappeared in 2025, falling 98% to 90 million euros.
Even before Trump imposed tariffs on foreign automakers last year, Volkswagen was struggling with flat demand in Europe and the costs of investing in electric vehicles despite disappointing demand and insufficient infrastructure.
Internal competition wiped out the group’s share in China, the world’s largest automobile market. Blume announced there “the largest product campaign in our history” to try to win back customers.
“After three intense years of realignment within the Volkswagen Group, we are seeing tangible progress,” Blume said. “At the same time, we operate in a fundamentally different environment.”
Reuters contributed to this report.
