Volkswagen Group Lowers Profit Forecasts, Tying Them to Chip Supply

Once again, turbulent times have struck the automotive industry. Volkswagen Group, Europe's largest car manufacturer, has released its results for the third quarter of 2025, and the figures are disappointing. Its operating profit plummeted by 58% compared to the same period in 2024, dropping from 12.812 billion euros to 5.408 billion euros.

For now, the consortium's Chief Financial Officer, Arno Antlitz, has indicated that their year-end forecasts remain stable, provided that the semiconductor supply from Nexperia does not create a bottleneck in their component suppliers. If it does, it would further hinder the industrial giant.

Volkswagen is currently facing a range of challenges, rooted in an ambitious transition to electric vehicles—mandated by the European Commission's environmental policies—amid a market that, although accepting, has not done so at the pace anticipated.

This slow transition to zero-emission mobility and a sluggish recovery in demand post-pandemic has left the manufacturer with costly overcapacity in its factories, some of which have been halted. Additionally, they are losing market share in the U.S. and China, one of the world's most competitive markets.

Their CEO, Oliver Blume, has initiated a restructuring plan to cut costs, including workforce reductions in Germany and in-house battery production to avoid reliance on external suppliers like China's CATL.

Within the group's divisions, the generalist brands—the business area called Core, which includes Volkswagen, Skoda, Seat, Cupra, and VW Commercial Vehicles—reported an operating profit of 4.719 billion. These brands saw a reduction in nearly all their results, except for Skoda, which continues to shine within the segment with 90 million more than in 2024, reaching 1.790 billion.

Seat and Cupra stand out, but not positively, achieving an operating profit of just 16 million euros, a 96.1% drop compared to last year's 415 million. Porsche's results are also poor, presenting operating losses of 228 million, impacted by its new plans to redirect its business back towards combustion engines.

Looking ahead to 2025, the group expects both deliveries and revenue to remain at the same level as at the end of 2024. That is, 9 million cars and 324.7 billion euros. However, they are once again lowering their profitability forecasts, indicating it will remain between 2% and 3%.

Finally, alarm bells rang last week when the German newspaper 'Bild' reported that Antlitz had stated the consortium would need 11 billion to carry out the necessary investments for the coming year.

Indeed, the year-end forecasts reveal two concerning figures in this regard: the automotive division's free cash flow will not reach 1 billion, and net liquidity will be negative, around 30 billion in the red.