Volkswagen Lowers Profit Margin Target and Shares Suffer Sharp Decline
German automotive giant Volkswagen has reduced its profit margin target to 1 percent due to impairment losses originating from Porsche.
German automotive manufacturer Volkswagen has revised its 2026 profit margin target downward due to billions of euros in impairment losses stemming from Porsche and worsening market conditions. Following the downgrade of financial targets, shares experienced sharp drops on the stock exchange, while unions prepared for protests.
Revision in Financial Targets
The Volkswagen Supervisory Board announced to the public that it has revised its financial targets downward following an extraordinary meeting. The statement noted that approximately 6 billion euros in impairment losses were recorded in line with new medium-term assumptions in the Porsche unit.
Profit Margin and Revenue Expectations
Volkswagen, which previously forecast an operating profit margin between 4 percent and 5.5 percent for 2026, lowered this target to a maximum of 1 percent. The company's annual revenue target also declined by approximately 7 billion euros compared to the previous year, dropping to 315 billion euros.
Selling Pressure on the Stock Market
Due to the deteriorating financial outlook, panic selling occurred on the Frankfurt Stock Exchange, and Volkswagen shares closed the day down 5.6 percent. Porsche AG shares lost 3.3 percent in value, while shares of the main shareholder Porsche SE also fell by 4.9 percent.
Restructuring and Actions
Within the scope of the restructuring plan led by CEO Oliver Blume, vehicle production at the Osnabrück plant is planned to be terminated as of 2027. Meanwhile, the IG Metall trade union announced that it will organize more than 200 protest actions nationwide on Monday with the participation of 100,000 workers.