Volkswagen crisis worsens with profit warning over Porsche-led $11.5 billion hit

BERLIN/FRANKFURT, Sept 18 — 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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