Volkswagen shares plummet! Porsche drastically lowers 2026 profit forecast; Porsche writes down €6 billion.

Volkswagen Group has once again lowered its full-year profit forecast, citing impairment losses on its Porsche business, increased competitiveness of Chinese automakers, and rising restructuring costs as the main reasons.

On September 18 local time, Volkswagen Group issued an announcement stating that it expects the group's sales revenue to be approximately 315 billion euros in 2026, with a maximum operating return on sales of only 1%, far lower than analysts' expectations of 4.29% and also far lower than the previously expected 4% to 5.5%.

The company expects special items to impact operating profit by approximately €10 billion for the full year, of which approximately €6 billion will be due to non-cash impairment of goodwill related to the Porsche business.

Volkswagen's stock price fell as much as 7.5% on Friday due to a downward revision of its earnings forecast, but ultimately closed down 5.6%. Porsche's stock price fell 4.9%, and the European automotive and parts sector fell by 3.4%.

Porsche writes down 6 billion euros

The most noteworthy aspect of Volkswagen's recent downward revision of its earnings forecast is the approximately €6 billion goodwill impairment charge on its Porsche business.

Volkswagen stated that Porsche updated its medium- and long-term plans, and accordingly adjusted the medium- and long-term assumptions used to assess the company's value. It also conducted a goodwill impairment test on the Porsche business, which ultimately expects to result in a non-cash impairment of approximately €6 billion, which will be primarily recorded in operating profit for the third quarter of this year.

Porsche had previously announced a mid-term operating profit margin target range of 10% to 15%. Volkswagen stated that changes in the profitability outlook for Porsche's business were one of the main reasons for this impairment.

Porsche is facing pressure from both US tariffs and declining Chinese demand for overseas luxury brands, which is putting significant strain on its profitability.

It's important to note that goodwill impairment is a non-cash expense and does not directly result in a corresponding cash outflow. Therefore, Volkswagen's recent downward revision of its profit forecast does not entirely equate to a deterioration in cash flow.

Chinese automakers are becoming more competitive.

Besides the Porsche write-down, the increased competitiveness of Chinese automakers is another major source of pressure for Volkswagen.

Volkswagen stated that in the Chinese market, consumer demand is rapidly shifting towards pure electric vehicles, causing the company's actual operating performance to fall short of previous expectations, with the Audi and Volkswagen passenger car brands being particularly affected.

Meanwhile, Chinese electric vehicles are also making a major foray into the European market, further intensifying competitive pressure in its home market.

As Chinese automakers like BYD expand their competitive advantage in the electric vehicle sector, Volkswagen not only needs to cope with pressure on sales and market share, but also needs to invest more funds in the electrification transformation process.

Volkswagen also explicitly stated that the accelerated growth in demand for pure electric vehicles is one of the factors affecting operating profit expectations. The profit margin of electric vehicles is generally lower than that of similar gasoline vehicles, and the rapid shift in sales structure towards electric vehicles is diluting overall profits. Furthermore, cost reduction measures in Germany have not yet been fully implemented.

Restructuring costs increased further

In addition to the Porsche write-down, Volkswagen expects to suffer approximately €2 billion in other one-off negative impacts in the second half of this year.

The company stated that these expenses include expanding the early retirement program, the planned sale of the Osnabrück plant, and non-cash impairment charges related to assets in the Chinese market.

Volkswagen had already launched a large-scale restructuring plan. According to a previous article by Wall Street Insights , Volkswagen plans to cut half of its models over the next 10 years and lay off an additional 50,000 employees. Combined with previously eliminated positions, the group's total layoffs will reach 100,000.

Arno Antlitz, CFO and COO of the Volkswagen Group, said that these special projects are expected to impact operating profit by about 10 billion euros this year, of which about 9 billion euros will be recognized in the second half of the year.

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