Germany’s automotive giant Volkswagen Group has fallen deep into the red, posting a net loss of €1.07 billion for the third quarter of 2025. The sharp downturn follows mounting problems at its luxury subsidiary Porsche, along with billions in one-off costs tied to U.S. tariffs and a controversial strategic shift back to combustion engines.
The Wolfsburg-based company had reported a profit of €1.56 billion in the same period last year. Over the first nine months of 2025, VW’s overall profit dropped by more than 60% — from €8.8 billion to €3.4 billion, according to company data confirmed by Reuters and the Financial Times.
€7.5 billion in special charges
Volkswagen blamed €7.5 billion in extraordinary expenses, including rising import tariffs, restructuring costs, and Porsche’s pivot toward extending the production of combustion vehicles. Excluding these special items, the group’s operating margin would have been 5.4%, which management described as “a solid result given the challenging economic climate.”
Despite the losses, VW’s revenue slightly increased by 0.6% to €239 billion, supported by steady European demand and improving deliveries of electric models. Yet, the cost burden from Porsche’s strategy reversal was enough to turn the group result negative.
Porsche’s reversal costs nearly €1 billion
Porsche, which had already reported deep red figures earlier this month, faced an operating loss close to €1 billion in Q3 alone. The brand is suffering from high costs linked to the delay in phasing out combustion engines — a decision the company defends as necessary due to weak demand for electric vehicles (EVs).
A Porsche spokesperson said the temporary step back toward conventional engines was intended to “respond more flexibly to market realities and customer needs.” Still, analysts warn that this move undermines the brand’s earlier image as a front-runner in electrification.
Volkswagen brand shows cautious recovery
While Porsche struggled, Volkswagen’s core brand is showing signs of gradual improvement, driven by its cost-cutting and restructuring program. As part of a long-negotiated deal with labor unions reached in late 2024, the company plans to cut over 35,000 jobs in Germany by 2030 — roughly one-quarter of its domestic workforce of 130,000.
The aim is to streamline production, reduce fixed costs, and restore competitiveness amid a rapidly changing automotive landscape dominated by EV transition pressures and global tariff uncertainties.
Leadership challenges ahead
CEO Oliver Blume, who heads both VW and Porsche, remains under intense scrutiny for managing the two brands simultaneously. According to reports by Reuters, Blume is expected to step down as Porsche CEO by the end of 2025, allowing him to focus fully on stabilizing Volkswagen Group.
Despite the quarterly loss, VW reiterated its full-year guidance, forecasting an operating margin between 2% and 3% and “stable revenues.” However, analysts caution that the group faces an uphill battle: the EV market slowdown, rising trade barriers, and internal restructuring costs could continue to weigh on results into 2026.
