Volkswagen has discovered the hard way that building millions of cars is easier than making money from them. The German giant has cut its 2026 revenue forecast after a bruising second quarter, with rising costs, US tariffs and aggressive Chinese EV rivals squeezing its once-formidable margins.

The numbers make uncomfortable reading. Volkswagen Group – home to brands including Audi, Porsche, Skoda, Cupra and Volkswagen – recorded €3.5 billion in operating profit between April and June, down 9.5 per centcompared with the same period last year. Revenue reached €82.4 billion, but the operating margin slipped to just 4.2 per cent.

VW had previously expected sales revenue growth of up to three per cent in 2026. Now it is preparing for a decline of up to three per cent instead. The company insists its operating margin target of 4.0 to 5.5 per cent remains achievable, but the pressure is obvious.

Chief executive Oliver Blume is attempting one of the biggest shake-ups in Volkswagen’s modern history. Proposed restructuring plans include around 100,000 job cuts, aimed at reducing costs and making the group more agile. In other words, the giant Wolfsburg machine needs to lose some weight.

The biggest headache is China. Volkswagen’s deliveries there fell 37 per cent in the second quarter as domestic manufacturers such as BYD and Geely surged ahead in electric vehicles. Once the benchmark for global carmaking, VW is now fighting to keep pace with faster-moving rivals that can launch EVs quicker and cheaper.

There is, however, a flicker of optimism. Volkswagen says demand for its new affordable EV family – including the ID. Polo, ID. Cross, Cupra Raval and Skoda Epiq – has been strong, attracting 70,000 orders within weeks.

The challenge now is simple: Volkswagen must prove it can reinvent itself before the future arrives without it. The company that once defined the modern car industry is discovering that staying on top is much harder than getting there.