In a candid admission, one of Volkswagen’s top executives has openly spoken about the threat of China on the car giant’s future, as it grapples with continuing to be a top player.
The Volkswagen Group recently announced its financial results for the first quarter of 2026, headlined by a 2.5 per cent drop in sales revenue to €76 billion (A$123.9 billion), as well as a 14.3 per cent fall in its operating result to €2.5 billion (A$4.1 billion).
However, most worrying for the brand is a seven per cent drop in vehicle sales to two million deliveries in the opening three months of 2026 compared to the same period last year, with declines in major markets such as China (20 per cent) and North America (nine per cent) having the biggest impact.
While Volkswagen says it expects its sales revenue in 2026 to “develop within a range of zero and three percent compared with the previous year), CFO and COO Arno Antlitz was more forthright in his outlook for the company.
“We made further progress in the first quarter of 2026: order intake in Europe improved, our ‘In China, for China’ strategy is progressing, we reduced overhead costs by nearly €1 billion, and net cash flow reached €2 billion,” Antlitz said in a media release.
“Despite this progress, our operating margin – even before special effects – remains far too low at 4.3 percent.
“Since we launched the Volkswagen Future Program one and a half years ago, the world has changed significantly: tariffs have been imposed, competition in China continues to intensify, and Chinese players are increasingly exporting competitive pressure to Europe.
“In this environment, the planned cost reductions are not enough. We must fundamentally transform our business model and achieve structural, sustainable improvements.
“This includes improving the cost structure of our vehicles without compromising product substance, significantly reducing overhead costs, increasing the efficiency of our plants, and accelerating technology development and decision-making.
“We can only achieve this by significantly reducing complexity – in our product portfolio and technology platforms, as well as in the number of entities and decision-making layers. This is what we will focus on in the coming months.”
Volkswagen CEO Oliver Blume was also direct in his assessment of the carmaker’s future.
“The world is undergoing fundamental change – and we are aligning our strategy consistently,” Blume said.
“Wars, geopolitical tensions, trade barriers, stricter regulations, and intense competition are creating headwinds. In this challenging environment, we have managed to make tangible progress.
“In the Passenger Cars and Light Commercial Vehicles segment, operating profit is up by around 43 percent compared to the previous year. Our product campaign is resonating with our customers. Our cost discipline is paying off. These achievements give us confidence. They form the foundation for further accelerating our transformation.
“At the same time, the financial result shows that, to improve and sustainably strengthen our competitiveness, we must consistently evolve our business model. We are aligning our products, technologies, and value creation even more closely with regional markets.
“Above all, our global business gives us decisive advantages in the race for innovation – on our way to becoming the global automotive tech driver.”
Volkswagen was last the world’s top-selling automotive group in 2018, having since relinquished its title to Toyota, the latter brand of which has continued to set global records.
Last year, the Toyota Motor Corporation delivered 11,322,575 automobiles worldwide, compared to Volkswagen’s total of circa-8.98 million vehicles, down 0.5 per cent on 2024.
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