By Christina Amann and Christoph Steitz
BERLIN/FRANKFURT, Sept 18 (Reuters) – Volkswagen slashed its outlook on Friday as it flagged €10 billion ($11.5 billion) in one-off items related to its stake in luxury sports car maker Porsche, provisions for job cuts and a weak Chinese market.
The news raises questions over Volkswagen’s Porsche brand, which has been hardest hit by US tariffs and collapsing demand for foreign luxury brands in China, creating a perfect storm for the division that posted a profit margin of just 1.1% last year.
Shares in Volkswagen, the world’s second-largest automaker, closed 5.6% lower on the announcement, while Porsche’s stock fell 3.3%. Volkswagen’s top shareholder Porsche SE also cut its outlook, sending its shares 4.9% lower.
New mid-term assumptions for Porsche, of which Volkswagen owns 75.4%, led to an impairment of some €6 billion, it said.
The profit warning deepens a crisis at Volkswagen, which earlier this month managed to agree far-reaching cuts with unions in the face of fierce competition from Asian rivals and stagnant demand in Europe.
Volkswagen, which also includes the Audi, Skoda and Seat brands among others, now expects a profit margin of 1% at the most in 2026, having previously guided for 4.0% to 5.5%.
It warned of a “further deterioration in the market environment, especially in China, as well as an accelerated shift in demand in favour of battery-electric vehicles”.
This, it said, would lead to lower expectations for the Audi and Volkswagen passenger car brands.
($1 = 0.8721 euros)
(Additional reporting by Tristan Veyet; Editing by Kevin Liffey, Louise Heavens and Alexander Smith)
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