VW China chief warns of 20% passenger car market decline

Volkswagen's top executive in China warned on Tuesday that the country's passenger car market is expected to shrink by about 20% in 2026, comparing the downturn to the devastation wrought by the COVID-19 pandemic.

Ralf Brandstaetter, Volkswagen's China chief, made the remarks at an industry summit in Beijing, according to Reuters. Domestic car sales in China have now fallen for 11 consecutive months through August, though exports have remained robust.reuters+1

The warning lands days after Volkswagen slashed its full-year profit outlook, deepening the sense of crisis at Europe's largest automaker.

Profit Guidance Gutted

Volkswagen on Friday cut its 2026 operating margin forecast to no more than 1%, down sharply from a prior range of 4% to 5.5%. The revision stems from roughly €10 billion in special items, led by a €6 billion non-cash goodwill impairment tied to Porsche and an additional €2 billion in restructuring charges and impairments on Chinese operations.finance.yahoo+1

Stripping out those charges, the company said its adjusted operating margin would be around 4%. Volkswagen still expects group revenue of approximately €315 billion for 2026.autoevolution+1

"The market changes are profound and lasting," Chief Financial Officer Arno Antlitz said after the warning, as reported by Bloomberg. "We have no time to lose."energyconnects

The pain is acute at Porsche, which delivered 122,306 vehicles worldwide in the first half of 2026, down 16% year over year. In China, Porsche deliveries plunged 32%.autoevolution

Workers Protest as Industry Retrenchment Accelerates

On Monday, tens of thousands of workers at Volkswagen, Mercedes-Benz, BMW Bayerische Motoren Werke AG, and major suppliers staged protests at more than 280 events across Germany, pressing companies and the government to protect jobs and factories.energyconnects

"We won't stand by while a key industry is hollowed out step by step," said Thorsten Gröger, IG Metall's regional chief for Lower Saxony and Saxony-Anhalt.energyconnects

Germany's auto industry has shed roughly 100,000 jobs since 2019, according to the VDA industry lobby, with suppliers losing nearly a quarter of their workforce over the same period. Volkswagen's supervisory board earlier this month approved Future Plan 2030, which includes a further reduction of approximately 50,000 positions groupwide.finance.yahoo+1

Broader Pressures Mount

The challenges facing Volkswagen reflect a structural shift in the global auto landscape. Chinese competitors such as BYD are exporting cheaper electric and hybrid vehicles into Europe, where their market share reached 11% in July. Meanwhile, a quicker-than-expected consumer shift toward battery-electric vehicles is squeezing margins at both the VW and Audi brands, which earn less on EVs than on combustion-engine cars.finance.yahoo+2

U.S. tariff policies have added further pressure, particularly for Porsche and Audi, which lack significant American production capacity. Volkswagen is due to publish interim results for the nine months ending September 30 on October 29.autoevolution+2