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Home » Volkswagen, 7,000 layoffs fail to boost profit, CFO admits —
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Volkswagen, 7,000 layoffs fail to boost profit, CFO admits —

staffBy staffMay 1, 20253 Mins Read
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Volkswagen’s move to cut 7,000 jobs in Germany as part of a sweeping cost-cutting initiative has failed to translate into improved profitability, the company’s Chief Financial Officer Arno Antlitz confirmed on Wednesday. The admission came during a call with analysts following the release of the automaker’s first-quarter earnings, which showed a sharp drop in profits despite a modest rise in revenue.

“Rest assured that we continue to drive implementation of the agreed measures with full force,” Antlitz stated, referencing the cost-reduction strategy launched in late 2023. While factory costs at the VW brand have come down, the overall financial impact has fallen short of expectations amid a wider backdrop of mounting challenges.

Europe’s largest carmaker reported a 40.6% plunge in net profit, which fell to €2.19 billion in the first three months of the year, down from a significantly higher base in 2024. Meanwhile, revenue rose slightly by 3% to €77.56 billion, reflecting demand for new models and a growing order backlog across Europe.

However, the decline in profitability was driven by a range of factors, including restructuring charges, regulatory fines, and rising production costs. Volkswagen had earlier warned of €1.1 billion in one-off costs, tied to its underperforming software division and penalties for exceeding EU emissions thresholds. These special charges severely dented the company’s operating performance, with earnings before tax dropping to €3.1 billion, compared to €5.1 billion a year earlier. The group’s operating margin fell to 3.7%, down from 6%.

Volkswagen’s financial update paints a broader picture of uncertainty for global automakers navigating evolving trade policies, rising costs, and uneven demand for electric vehicles. The company acknowledged that it now expects its full-year business performance to sit towards the lower end of its guidance range, with an operating return on sales between 5.5% and 6.5%. Notably, this forecast does not fully account for the unpredictable impact of US tariffs.

President Donald Trump’s aggressive trade stance has added further complications. The US currently accounts for over 11% of Volkswagen’s deliveries, making it the company’s third-largest market. While Volkswagen operates a plant in Tennessee, most vehicles sold in the US are still imported — leaving the company exposed to levies of up to 25% on car imports.

“It’s highly difficult to give a projection for the full year,” Antlitz noted, underlining the uncertainty posed by evolving US trade policy.

Weaker-than-expected demand in China — another critical market — along with overcapacity at European factories, has compounded pressure on the German carmaker. Meanwhile, the transition to electric vehicles remains uneven across major markets, creating additional volatility.

Volkswagen’s luxury subsidiary Porsche AG has also lowered its profit outlook, citing both trade tensions and softer EV sales. Despite strong European demand for new models, the group is navigating a period of significant headwinds.

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