VW's US Recall Adds Fresh Pressure as China Profit Collapses and Labour Talks Drag On
Published on 09/18/2026 at 18:10 | Editorial boerse-global.de
Volkswagen's preferred stock came under heavy selling pressure on Friday, with a sweeping recall across the Atlantic compounding worries that had already been building over the group's Chinese operations and its stalled restructuring at home.
The Wolfsburg-based manufacturer has announced two separate recalls in the United States covering more than 250,000 vehicles, according to media reports. Steering defects and software malfunctions are cited as the causes. Shares, which had been drifting only modestly lower through the morning, accelerated their decline in the afternoon and were down 5.4% at EUR 76.30, compared with Thursday's close of EUR 80.64.
The scale of the action matters beyond the immediate repair bill. Recalls of this size tend to dent a brand's standing in what remains one of the carmaker's most important sales regions, and they land at a moment when Volkswagen can ill afford distractions.
Profit engine sputters in China
Far more consequential is the erosion of the group's earnings base in China. Volkswagen held the top spot in that market continuously from 2008 to 2023, but has since been overtaken by rivals including BYD and Geely. The profit contribution from its Chinese joint ventures — which once reached roughly EUR 5 billion at its peak — has shrunk to less than EUR 1 billion.
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That deterioration has pushed the debate into the political arena. Following a meeting with Vice Chancellor Klingbeil in Wolfsburg, works council chief Cavallo demanded binding commitments on jobs at the German sites. Labour representatives and politicians are also pressing the European Union to act against mounting competition from Asian manufacturers, calling for swift tariffs on Chinese plug-in hybrids and strict local-content requirements for production in Europe. Klingbeil has signalled support for a tougher line on Beijing and backs not only import duties but also conditions on joint ventures for Chinese carmakers seeking to build plants on the continent.
The cost of the overhaul
Behind those demands sits the most far-reaching restructuring in the company's 89-year history. A reduction of 50,000 jobs in Germany has already been agreed, with a further 50,000 positions across the group still under review. Management is budgeting as much as EUR 16 billion to execute the savings programme, of which up to EUR 10 billion is earmarked for severance payments and partial-retirement arrangements through 2030.
Production adjustments at Zwickau, Emden, Hannover and the Audi plant in Neckarsulm carry potential price tags of up to EUR 2 billion each. A decision on the four German sites has yet to be made, and the unresolved question of which factories will survive has generated considerable friction between the workforce and management. Chief executive Blume's objective is to lift the core brand's operating return on sales to 9% by 2030, up from 3.8% in the first half of 2026.
Robotaxi venture stalls
The difficulties extend beyond conventional vehicle manufacturing. At Moia, the group's ride-hailing unit, the search for outside investors has so far come up empty. Manager Magazin reported that talks with mobility groups Uber and Lyft over a stake in the robotaxi project fell through. Volkswagen has invested around EUR 2 billion in the platform to date and is estimated to need at least another EUR 1 billion to continue developing the self-driving minibus based on the ID.Buzz.
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Analysts remain divided on what the shares are worth. Berenberg keeps a "Buy" rating with a EUR 100 price target, citing the restructuring measures and the China strategy. Jefferies is more bullish still at EUR 120, while Bernstein Research takes a more cautious view, rating the stock "Market Perform" with a EUR 100 target.
The broader pressures are not confined to Volkswagen. All three major German manufacturers are grappling with an increasingly unforgiving battle for market share, as Chinese competitors outpace established players on production, pricing and sales volumes. The gap weighs most heavily in electric vehicles, and it is forcing the group into further cost-cutting.
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