Porsche made an operating margin of 0.3 percent in 2025. The year before it made 14.5. Operating profit fell about 98 percent, to €90m.
Volkswagen Group deliveries in China fell 37 percent in the second quarter, in a market that was itself down around 20 percent. Group operating margin is running near 4 percent across a portfolio that contains Volkswagen, Skoda, Audi, Porsche, Bentley and Lamborghini.
Some investors have reportedly concluded the group is not fixable. That is their characterisation and not ours. But it is worth taking seriously enough to ask what fixing it would actually involve, because the answer is more specific than the phrase suggests.
This is not the Jaguar Land Rover problem
This paper wrote yesterday about JLR, where a fifth off revenue removed ninety-nine percent of the profit. That is operating leverage: a fixed cost base meeting a variable volume, and the remedy is volume or a smaller base.
Volkswagen has that too, and it has something else on top. Its own diagnosis names it: a structure that is too expensive, too layered and too slow.
Ten-plus brands sharing platforms was supposed to be a scale argument. One set of engineering costs amortised across many badges, one supplier base, one parts bin. Done well it is the most powerful idea in mass-market car manufacturing.
Done at this size it produces the opposite: the cost of maintaining variety, plus the coordination overhead of making every decision compatible with every brand that shares the platform. Which is a description of a slow company, and speed is precisely where the competition has moved.
China is where the tempo shows
A 37 percent delivery fall in one quarter is not a pricing problem that a discount fixes. Chinese manufacturers are running model cycles measured in months against incumbents running them in years, and in a market where the buyer treats the car's software as the product, a three-year cycle is not a slower version of the right answer. It is the wrong product.
The second-order effect is the one European investors are actually pricing. Those same manufacturers are exporting into Europe, which means the volume Volkswagen lost in China arrives as competitive pressure in the market where it still makes money.
What "fixing it" would mean
Reduce complexity, says the company. Fewer platforms, fewer variants, lower overhead, more efficient plants.
Every one of those is a euphemism for a decision that Volkswagen's ownership structure was substantially designed to prevent. Fewer plants means closing German plants. Lower overhead means large-scale white-collar reduction. Fewer brands means killing or selling marques with their own workforces and regional attachments.
The supervisory board is half employee representatives. The State of Lower Saxony holds a blocking stake and a seat. That structure exists to make exactly these decisions hard, and it has succeeded in that for decades — which was a feature when the argument was against short-termism and is the binding constraint now that the required move is structural.
So "not fixable" is probably the wrong phrase, and it is not one this paper would use. The accurate version is narrower: the fix is known, it is not technically difficult, and the governance was built to stop it. Whether that is a flaw depends on what you think a company is for, and reasonable people have argued the German model's side of that for seventy years.
And €186bn is still going out of the door
The group plans to invest around €186bn through 2030.
That is the part which makes the margin figure uncomfortable rather than merely bad. A 4 percent margin funds very little of that internally, which means the transition is being financed against a business whose cash generation is deteriorating in its largest growth market. The same arithmetic this desk described in the AI build-out applies here with worse numbers: when capital spending approaches what the operations produce, the balance is borrowed, and the borrowing is priced against an assumption that the spending works.
The number that will tell you
Not group margin, which blends a dozen businesses and hides which one is failing.
Watch Porsche's margin in 2026. Fourteen and a half to 0.3 in a year is not a cycle — a luxury marque's margin is its pricing power, and pricing power does not fall ninety-eight percent because the market softened. If it recovers to double digits, the fall was Chinese demand and tariffs and it passes. If it settles at low single digits, the most profitable brand in the group has become an ordinary carmaker, and every argument for the current structure has to be made again without it.
The fall in Porsche's 2025 operating profit of about 98 percent to €90m and in its margin from 14.5 percent to 0.3 percent; the 37 percent fall in Volkswagen Group deliveries in China in the second quarter against a total Chinese market down about 20 percent; the group operating margin running near 4 percent; the company's own statements that its structure is too expensive, too layered and too slow, that currently planned initiatives are not sufficient, and that it must lower its cost base through vehicle cost structures, overhead, plant efficiency, faster technology development and reduced complexity in portfolios, platforms and decision-making; and the planned €186bn investment through 2030 are as reported by Investing.com, Yahoo Finance, MarketScreener and Volkswagen Group's own releases during 2026. The characterisation of the group as not fixable is attributed by that reporting to some investors and is not this publication's assessment. The analysis is our own.
Topics businessautomotivechina
