Volkswagen, the German automobile giant and the world’s second-largest carmaker, which is facing a severe financial and structural crisis, complicated by headwinds like falling margins, intense Chinese competition, high production costs, tariff pressure, job cuts, potential plant closures and ongoing labour disputes, has reported a 5.9 billion euro (USD 6.59 billion) operating loss in the third quarter.
The German automaker, which is in the middle of its biggest-ever organisational restructuring, faced significantly higher operating losses for the three months than the 2.6 billion euro forecast by Visible Alpha analysts, compared with a 1.3 billion euro loss a year earlier.
Sales revenue also fell more sharply than expected, declining 6% to 75.3 billion euro.
“The nine-month results make one thing clear: We cannot afford to lose any time. We must act quickly and decisively,” Volkswagen’s finance chief Arno Antlitz said in a video statement.
As part of Volkswagen’s ongoing restructuring efforts, Chief Executive Oliver Blume plans to cut 100,000 jobs across the group, which includes Audi and Porsche.
Up to four plants in Germany could close under the restructuring plan, which has encountered fierce opposition from unions and raised the prospect of strikes from early 2027.
Antlitz attributed the substantial third-quarter loss to special items totalling around eight billion euros.
However, he warned that the company’s underlying profitability remained inadequate even without those charges.
“Even before these special items, our operating return on sales after nine months is just 3.8%,” he said, while adding, “That is not enough in the long term.”
In September, Volkswagen flagged 10 billion euro in one-off costs, largely linked to problems at Porsche.
The company also cut its 2026 profit margin forecast to a maximum of 1%, underscoring the scale of the financial challenges facing the group.
Volkswagen, through its organisational rejig, attempts to strengthen its competitiveness while managing the costs of developing new vehicles, adapting to changing consumer demand and responding to the rapid growth of Chinese electric-vehicle manufacturers.
Alongside its cost-cutting efforts, Volkswagen is also turning to China as a technology development hub to strengthen its position in international markets.
The automaker announced on Wednesday that its Compact Main Platform, combined with the China Electronic Architecture, will feature in next-generation models targeting markets across the Global South.
Developed by Volkswagen’s research and development centre in Hefei, eastern China, in partnership with Chinese firms, the technology is expected to reach South America by the end of the decade.
Volkswagen is also bringing China-developed technologies to markets, including South Africa, as it seeks to improve its global competitiveness.
The strategy reflects a broader shift among established automakers, including General Motors, Hyundai and Renault, which are increasingly looking to globalise technologies developed in China to compete with local manufacturers in international markets.
Volkswagen also unveiled VEGA, a technology package featuring 850-volt fast charging and readiness for Level 3 autonomous driving. The package is scheduled for launch in 2027.
Volkswagen’s technology push comes as its market share in China declines amid growing competition from domestic manufacturers such as BYD and Geely.
Chinese companies have gained ground on foreign rivals through electric vehicles, software capabilities and price-driven competition.
Volkswagen has responded with its “In China, For China” localisation strategy, which places greater emphasis on developing products and technologies suited to Chinese consumers.
The group has said its local development model can reduce development time by up to 30%.
The China Electronic Architecture, jointly developed by Volkswagen and Xpeng, aims to support software-defined vehicles across various platforms and powertrains.
Volkswagen has described its current product offensive in China as an effort to “regain the lead” in the market.
The company is now looking to extend some of the technologies developed through that effort to other regions.
Southeast Asia, Latin America and Africa have been identified as potential destinations for China-developed models. Volkswagen has ruled out Europe and North America for now.
South America will be the first overseas market for Volkswagen’s China-developed architecture, partly because of its price-sensitive consumers and the established presence of Chinese automakers.
Frank Han, chief executive of Volkswagen software unit CARIAD China, said the region was selected with those market conditions in mind. Although deploying the technology in Europe was technically feasible, he said the decision would rest with Volkswagen’s German headquarters, which would need to consider geopolitical factors.
A media report has also suggested that Volkswagen could introduce software used in its China-sold vehicles into its mass-market range in Europe.
The move comes as Chinese automakers expand exports in response to intensifying domestic competition, rising production capacity and slowing growth in their home market.
Exports have become increasingly important to their expansion plans, although trade barriers and political resistance remain obstacles in several markets.
Volkswagen China chief Ralf Brandstätter expects China’s passenger-car market to shrink by 20% this year, equivalent to around 4.5 million vehicles.