Six of the nine members of Volkswagen’s board of directors called the situation at Germany’s largest company “existentially threatening.” The auto giant with a staff of 600,000 and a century-old history is losing the battle for China, is suffocating from tariffs in the United States and has still not recovered from the blow in Russia. What is happening with the German auto industry – in the material of Motor magazine.
Volkswagen, considered the standard of German reliability for decades, may cease to exist. This conclusion, according to an internal survey leaked to the media, was made by the top managers of the concern itself. Six of the nine board members described the current strategic situation as “existentially threatening to the company.” Three others described it as “tense.” No one chose the “safe” option, reported the German publication Manager Magazin, citing its sources in the group.
The concern, whose annual turnover exceeds €322 billion and employs 614 thousand people, is losing the battle for key markets. Losses in China and the United States, as well as a painful exit from Russia, where VW held a dominant position for many years, are just the tip of the iceberg.
Scania truck
Scania
Who is part of the VW empire
The Volkswagen Group’s orbit includes not only the brand of the same name, but also Audi, SEAT, Cupra, Škoda, Bentley, Lamborghini, Porsche, Bugatti, Traton Group, Scania, MAN, International, Ducati, Scout Motors and others.
Ducati MotoE electric superbike prototype
Ducati
The internal survey was conducted against the backdrop of rapidly deteriorating financial performance and revealed bitter divisions within top management. However, all participants unanimously agreed on one thing: the group requires an immediate and radical revision of its strategy. The greatest concern was caused by the situation in China and North America – two support markets for the German manufacturer.
Russian node
The story of leaving Russia stands out, a decision that caused serious financial damage. Until 2022, the Russian Federation was among the priority markets for the group: VW and Skoda were assembled in Kaluga and Nizhny Novgorod, and together with the premium Audi, Porsche and cargo division, business in the country was thriving.
In 2021, Volkswagen took first place in the ranking of foreign companies in Russia according to Forbes. The total revenue of all Russian subsidiaries (Volkswagen Group Rus, Scania Rus, Porsche Russland, MAN) exceeded 0.5 trillion rubles, which amounted to about 2.4% of the concern’s global sales.
The Kaluga plant, with a capacity of 225 thousand cars per year, produced Polo, Tiguan and Rapid, and Octavia, Karoq, Kodiaq and Taos were assembled at GAZ facilities in Nizhny Novgorod. In March 2022, production stopped. As the report later explained, transport corridors ceased to function, and component logistics became either impossible or economically prohibitive.
Volkswagen plant (archive photo)
Volkswagen
The result of 2022 turned out to be catastrophic: Volkswagen Group Rus LLC received a net loss of 8.8 billion rubles against a profit of 4.8 billion a year earlier. Revenue collapsed 3.6 times – to 99.9 billion rubles.
Skoda took a particularly hard hit: Russia was its second largest export market, and the losses of the Czech brand are estimated at about €700 million.
And even after leaving, the problems did not disappear. In July 2024, the arbitration court recovered 17 billion rubles from VW in favor of the Gorky Automobile Plant for undelivered diesel engines, which paralyzed the production of GAZelle Next. Initially, GAZ demanded more than 28 billion rubles.
Falling figures
Reports for the first quarter of 2026 confirm the worst fears of German managers. The group’s net profit decreased by 28% (to € 1.56 billion), operating profit fell by 14% (to € 2.46 billion), and revenue decreased by 2.5%, amounting to € 75.7 billion.
Global sales in January-March fell by 4% (to 2 million cars). At the same time, in China they fell by 20%, in North America – by 9%. Slight growth in Europe was unable to offset these losses.
The alarm bell is that Porsche’s profits have dropped by almost a quarter. The only ray of light is Skoda, whose sales unexpectedly rose by 14% amid a general decline.
Electrical failure and duties
The main strategic miscalculation was the forced transition to electric propulsion. The margins of electric vehicles turned out to be much lower than those of models with internal combustion engines: high production costs cannot be compensated by either circulation or prices.
Porsche 718 Cayman
Porsche
EU fines complete the picture: from 2025 to 2027, VW will pay €400-500 million annually for exceeding CO₂ limits amid falling demand for “green” cars. In the first quarter of 2026, electric vehicle sales plummeted by 80% in the US and 64% in China. The new generation rescue architecture, expected in 2026, has been delayed by four years.
Donald Trump’s American tariffs became another knife in the back: in the first half of 2025, they cost the concern $1.5 billion. In response, VW has already curtailed production of the ID.4 crossover in the United States.
Assembly of the Volkswagen ID.5 electric car in the European Union
Volkswagen
Factories stop working
The situation with the plant in Osnabrück, where 2,300 people work, is symptomatic. After 2027, the company does not have a single approved production plan. Now they are reducing the production of the T-Roc convertible, and as one of the rescue scenarios they are discussing the transfer of workshops to the production of components for air defense systems. At the same time, VW engineers developed an experimental Amarok assault pickup truck.
In total, by 2030 the concern intends to cut about 50 thousand jobs in Germany. The only question is whether the company can survive this transformation without completely losing itself.
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