Volkswagen Group CEO Oliver Blume has issued a frank warning to shareholders that the company must take urgent steps to become more cost-efficient and agile.
Speaking at the company’s AGM in Wolfsburg, Blume acknowledged early progress in the company’s restructuring strategy but stressed that inefficiencies continue to hamper its financial performance.
In the first quarter of 2025, the Volkswagen Group reported an operating profit of €2.9 billion (£2.5bn), a significant decline from the €4.6bn (£3.9bn) achieved in the same period of 2024. This represents a year-on-year decrease of approximately 37%.
The drop in profitability was attributed to so-called special effects totalling €1.1bn (£0.9bn), including costs related to EU CO₂ regulation payments, restructuring measures at the Cariad software division and adjustments linked to import duties introduced in the US.
The operating margin also declined, falling from 6% in the first quarter of 2024 to 3.7% in the same period of 2025.
Despite this, the group's sales revenue rose by 2.8%, from €75.5bn (£63.6bn) in Q1 2024 to €77.6bn (£66.6bn) in Q1 2025.
In his speech, Blume laid bare the scope of the challenge: “We must address all cost categories – from development and materials to production and fixed overheads.”
His message aligns with recent decisions by Volkswagen Group brands to pause or revise several electric vehicle programmes in favour of combustion-engined models due to rising development costs and below-forecast demand.
Despite these issues, Blume pointed to the group's ability to scale technology across its various brands as a key strength. “We don’t just develop technology - we scale it,” he said. “Software, battery systems, vehicle platforms – that’s our strategic strength.”
Performance varies across the Volkswagen Group’s portfolio. Audi has shown signs of recovery in Europe with the rollout of the Q6 E-tron, although profitability remains thin.
Skoda and Cupra continue to post sales growth, with Cupra in particular becoming a key revenue driver - and Volkswagen’s passenger car division continues to dominate European sales charts, but price cuts on key models have dented margins.
Meanwhile, delays in launching the electric Macan have affected Porsche’s first-quarter sales earnings.
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