The Volkswagen crisis Slump in profits and job cuts at VW - but millions for former executives

The car manufacturer Volkswagen is under massive pressure. Following a 44 percent slump in profits, the Group is planning to cut around 50,000 jobs in Germany - while at the same time paying out high bonuses. How could the Group fall so low?

This news from the problem child VW from Wolfsburg hit like a bombshell at the beginning of March 2026. The car manufacturer's profit in 2025 slumped by a whopping 44 percent compared to the previous year. US tariffs and high costs at Porsche following a change in strategy were the main contributors to the result.

But the crisis began years earlier.

The crisis at VW began in 2015, when it became known that the German car manufacturer had manipulated emissions tests on millions of diesel cars. The diesel scandal led to lawsuits, recalls and penalties worldwide and cost Volkswagen a total of over 33 billion euros.

The scandal is history, but the financial problems have worsened massively to this day.

Last year, the Group sold 8.98 million cars of all brands worldwide - a decrease of 0.5 percent compared to 2024. Although Volkswagen grew in Europe, declines in China and North America canceled out the growth.

In the important US market, US President Donald Trump's policies are having a particularly negative impact on business. The customs policy had a strong impact on the figures, and the framework conditions for electric cars also deteriorated after Trump canceled subsidies and adjusted emissions regulations.

The VW Group is particularly concerned about developments at Porsche. The sports car manufacturer suffered a massive slump in profits in 2025: The operating result slumped to 90 million euros - after just under 5.3 billion euros in the previous year.

The manufacturer is suffering from weak sales in China, higher US tariffs and a misjudgement regarding the pace of electromobility. As many customers continue to prefer combustion engines, Porsche is once again focusing more on classic drive systems. Although the company expects a further decline in sales in 2026, it anticipates a return of more than five percent.

The pay and bonus policy at the former German flagship company has also come under fire. Volkswagen is in the midst of upheaval in the car industry: plants are being rebuilt, costs cut and structures adapted. Nevertheless, wages at Europe's largest car manufacturer are still among the highest in the industry. The Group pays according to its own company wage agreement with 22 salary levels, which is significantly higher than the usual wage rate in the metal and electrical industry. Production employees usually earn between around 3,900 and 4,300 euros gross per month, which corresponds to an annual salary of around 56,000 euros. In addition, around 120,000 employees in Germany receive bonus payments, which most recently amounted to around 4,800 euros per year.

Even more is paid out to management. According to data from "kununu.com", employees in middle management earn an average of around 82,600 euros per year, with bonuses of over 90,000 euros. Executives in upper management earn over 200,000 euros, and some in top management even over 500,000 euros a year. For comparison: according to "kununu.com", an HR manager at BMW earns between 60,800 euros and 80,600 euros on average. In Germany, the average annual salary in 2024 was 62,235 euros. However, salaries are to be significantly reduced in 2026.

However, the Group has really come under fire for its bonus mentality at top management level. At Volkswagen, even former Group CEOs continue to earn millions. The best-paid manager in 2025 was former CEO Herbert Diess, who still received 9 million euros despite his departure - more than the current CEO Oliver Blume, who received 7.4 million euros including bonus and pension.

Blume's income was also around 3 million euros lower than the previous year because he and other Group CEOs waived part of their salary as part of the cost-cutting program and his bonus as Porsche CEO was omitted due to the slump in profits. Former bosses such as Matthias Müller and Martin Winterkorn also continue to receive annual pensions of 1.2 and 1.3 million euros respectively. This is causing a major debate in Germany.

The Volkswagen Group is repeatedly criticized for its slow decision-making process. The reason for this is the company's complex structures: in addition to the management, the works council, the state of Lower Saxony and the Porsche and Piëch owner families also have a great deal of influence. As a result, strategic decisions often take longer than at many international competitors.

Experts also criticize inefficient processes and a high level of bureaucracy within the Group. The many hierarchical levels and coordination processes mean that projects often progress more slowly and incur additional costs. Large development projects in particular require the involvement of numerous departments, which makes processes complex and cumbersome.

Duplication of work and a pronounced meeting culture are also repeatedly cited as problems within the company. According to internal analyses, there were unclear responsibilities and delays in important projects, particularly at the software subsidiary Cariad. The Group has therefore been trying for some time to simplify structures and shorten decision-making processes in order to be able to react more quickly to changes in the automotive market.

Experts criticize the Group for oversleeping the change to some extent, as reported by "cleathinking.de" at the beginning of 2025. For years, VW relied heavily on combustion engines, while new competitors such as Tesla or Chinese manufacturers consistently focused on electric cars early on and were able to gain market share as a result. Today, the Group is struggling with weak demand for electric cars. Growing competition is putting further pressure on the Wolfsburg-based company - especially from China - and the costs of electromobility are high. Although VW wants to convert, the question remains as to whether the Group can afford it.

Another problem is software difficulties within the Group. The software subsidiary Cariad was originally supposed to provide the digital basis for new electric platforms, but technical problems and budget overruns delayed the projects. As a result, several electric vehicles were launched later than planned, and the new SSP electric platform and models such as the electric ID. Golf have also been delayed by years in some cases.

The strategy is therefore being realigned under Group CEO Oliver Blume. VW is working more closely with external partners and reviewing its model policy. VW is also trying to bring cheaper electric cars onto the market. Production costs are to be reduced. In this way, VW wants to become competitive again with Chinese manufacturers.

The VW Group now wants to save money. The workforce is particularly affected. Up to 50,000 jobs are to be cut by 2030. But the focus is also on the plants. In the case of VW, plants will also have to be closed, according to the Group itself. However, this is not easy. Plant closures at VW are extremely difficult due to the strong co-determination by employee representatives and the state of Lower Saxony on the Supervisory Board, the VW law and far-reaching employment protection agreements with IG Metall.

High energy and production costs in Germany jeopardize international competitiveness, as they reduce margins and make investments abroad more attractive. In Germany in particular, energy costs lead to lower profitability, which increases the pressure to make savings in the current market environment with lower demand and strong competition from China. Energy and production costs may rise as a result of global developments or economic changes.

There is growing concern among politicians, the Group's workforce and the works councils. Because what began as a transformation is now sliding into a tangible crisis. Employees fear for their jobs. Although the reduction of 35,000 jobs at the VW brand has already been announced and an agreement has already been reached for 25,000 of those affected, the expansion to 50,000 jobs is hitting the company like a punch in the gut. The economy and politics fear for the existence of the company. After all, VW not only provides many jobs, but also makes a considerable contribution to the strength of the German economy.