Volkswagen warns of deeper cuts as first quarter profit slides

By Rachel More

BERLIN, April 30 (Reuters) – Volkswagen must fundamentally overhaul its business as tariffs, geopolitical shocks and weak car demand batter the industry, the automaker said on Thursday, with a sharp first-quarter profit drop underscoring the urgency.

“In this environment, the cost-cutting measures planned so far are not enough,” finance chief Arno Antlitz said as the company presented quarterly results, calling for further steps to secure the German group’s future.

Volkswagen reported an unexpected 14% fall in first-quarter operating profit to 2.5 billion euros ($2.9 billion). Analysts had expected profit to be broadly flat, according to a Visible Alpha poll. Its shares fell by 3% following the results, but regained ground to trade 0.2% higher at 0745 GMT.

The group, which includes Porsche and Audi, has been hit by steep U.S. tariffs expected to cost about 4 billion euros a year, and is battling to arrest sliding sales in China and the U.S.

It already plans to cut around 50,000 jobs across the group in Germany by 2030.

The Wolfsburg-based company posted quarterly revenue of 75.7 billion euros, down 2.5% and below analysts’ estimate for 77.6 billion euros.

That translated into an operating margin of 3.3%. Volkswagen forecasts a rise in operating margin to between 4% and 5.5% in 2026 from 2.8% in 2025.

CEO Oliver Blume has vowed to “turn over every stone” in Volkswagen’s quest for further savings, with under-used plants under scrutiny as well as the group’s sprawling business portfolio and complex model range.

It was also forced to adjust its strategy In China, where the German automaker has invested billions to develop and produce cars to serve the local market and for exports.

Since 2023, Volkswagen has reduced capacity by around 1.5 million cars in China and scaled back long-term sales targets. Volkswagen deliveries in the world’s largest automotive market dropped by 15% at the start of the year.

The group confirmed its full-year guidance but warned that it does not factor in a potential escalation in the Middle East conflict.

The Iran war is adding to uncertainty for Europe’s embattled carmakers, with Mercedes warning that raw material costs are on the rise while Porsche has flagged weaker demand in this small but lucrative market for luxury brands.

($1 = 0.8576 euros)

(Reporting by Rachel MoreEditing by Kirsti Knolle, Mark Potter and Tomasz Janowski)