Volkswagen Pursues Margin Growth, Deepens Cost Cuts

This outlook follows a challenging 2025, where the automaker reported a 2.8% operating margin on €321.91 billion in revenue, falling short of its own 2%-3% margin guidance. The company aims for a significant long-term target of 8% to 10% margin by 2030, underpinned by "strict cost and investment discipline." Key initiatives include a substantial workforce reduction of over 35,000 by a late 2024 union deal, expanding to approximately 50,000 across the group by 2030.

These measures contributed to €1 billion in cost savings in 2025, with an annual target of over €6 billion by 2030. Despite these efforts, Volkswagen faces persistent headwinds such as high domestic costs, softening demand for electric vehicles, intense competition from Chinese EV manufacturers, potential U.S. tariffs, and the discontinuation of U.S. EV subsidies.

Fourth-quarter operating profit declined to €3.46 billion, missing analyst expectations, and revenue also fell. Consequently, the company proposed a reduced dividend for both ordinary and preferred shares.