Volkswagen Q3 Loss Largest Since Dieselgate

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The Volkswagen Group on Thursday posted its worst quarterly numbers in more than a decade. According to German news source DW, the company reported an operating loss of €5.86 billion for the period July 1 through September 30, 2027. A massive write down of its stake in Porsche was responsible for much of the loss, while its sales in China continued to decline at an alarming rate.

“The nine month results make one thing clear: We cannot afford to lose any time. We must act quickly and decisively,” chief financial officer Arno Antlitz said in a video statement. DW was quick to point out that the cockamamie tariffs on cars imported into the US from Germany were another significant factory in the dismal financial picture for Volkswagen. The US is Porsche’s largest market and those tariffs have had a devastating effect on its sales in America.

For the third quarter, Volkswagen reported an operating loss of €5.86 billion — four times greater then the loss is posted last year in the third quarter. That marks the company’s worst performance since the Dieselgate crisis in 2015. Revenue from sales fell by 6.3 percent year on year to €75.3 billion. Deliveries to customers, unit sales, and unit production numbers all dipped by roughly 15 percent as the company reduced production levels in an attempt to adjust factory output to match lower demand.

For 2026 so far, the company has had gross sales of €233.4 billion, which was virtually the same as last year, but sales volume was off 11 percent compared to 2025, so it is selling fewer cars but at higher prices.  Operating profit was just €0.1 billion, compared with €5.4 billion a year ago. But so-called “special items” totaling €8.7 billion — including a non-cash write down of €6.4 billion on Porsche assets —  led to that nearly negligible operating profit.

For the year, Volkswagen now expects its profit margin to be just 1 percent — far less than the 5 percent it projected at the start of the year. The only bright spot in the financial picture for Volkswagen is that sales of battery electric cars are up 39 percent year on year.

A Gleam In The Gloom

Volkswagen’s first joint venture in China was with SAIC in 1984. At that time, China knew next to nothing about manufacturing high quality automobiles. Now more then 40 years later, the tables have turned and China is making what are perhaps the highest quality automobiles in the world. Volkswagen, which was once the teacher, is now the student. If it is to survive, it may be because of the contributions of its Chinese partners — SAIC, FAW, Anhui, and Xpeng.

Together, they have created Vega, a new technology package comprised of software, electronics, and a dedicated EV platform, making Volkswagen the only non-Chinese automaker with a locally developed technology foundation represented in the Chinese market. While the package will first be used for cars made and sold exclusively in China, the company hints it may become part of an export campaign. Sharp eyed readers will immediately spot the irony of a company that is being hammered by Chinese imports in its home market becoming a Chinese import itself, at least in some markets.

The China Main Platform (CMP) is designed for battery-electric and plug-in hybrid models in the A-segment. It is expected to achieve a CLTC range of over 600 km, with an efficient energy consumption of around 11 kWh per 100 km. Charging from 30 to 80 per cent will take 25 minutes. For the premium segment, the China Scalable Platform (CSP) features 850 volt architecture, which makes charging from 10 to 80 per cent in just 13 minutes possible. Models built on the CSP architecture are expected to have a range of 800 km or more, with energy consumption below 13 kWh per 100 km.

ADAS

Autonomous driver assistance systems are now critically important to new car sales in  China, and so Volkswagen is putting a priority on providing cutting edge ADAS technology to its customers in China. Volkswagen’s software subsidiary, now called Carizon, has developed its first in-house L2++ package known as HyperSense 8. This system will enter series production in seven new electrified models from the Chinese joint ventures FAW-Volkswagen, SAIC-Volkswagen and VW-Anhui before the end of this year.

HS 8 utilizes a powerful onboard computer that supports navigation assisted driving both on highways and in urban traffic. Automated parking assistance for all everyday and parking scenarios is integrated into the new system. Thanks to a robust training system the can simulate up to 10 million kilometers of driving a day, the ADAS system will be able to handle even rare and unexpected extreme situations safely, the company says.

Level 3 systems, which allow drivers to take their hands off the steering wheel permanently under certain conditions, are scheduled to reach series production by 2027. Volkswagen has already obtained an official licence for real world road testing in Hefei. Volkswagen intends to have Level 4 autonomy in its cars for the Chinese market by 2029, thanks to the third generation of its CEA electronic architecture (CEA 3.0) and a Volkswagen-developed proprietary control chip known as  C7H.

Exports On The Horizon

Four years ago, Volkswagen Group launched its strategic transformation under the motto “In China, for China.” Now, it is making a strategic pivot that is more globally oriented known as “In China, Beyond China.” China is transitioning from a sales market into a central research hub and an export node for the company’s worldwide activities..

In fact, the deployment of China-developed electronics in Europe may soon be on the horizon. Today, models from Volkswagen produced in China are being exported to the Middle East, Uzbekistan, Kazakhstan, and parts of Sub-Saharan Africa.

By the end of 2026, exports are set to expand to markets such as Mexico, Egypt and Vietnam, followed by more countries in the ASEAN region and South America. Beyond vehicle exports, the combination of the CMP platform and CEA electronic architecture serves as the technical basis for upcoming model ranges throughout the Global South, particularly South America.

German mechanical engineering has always been the standard of the world, but Volkswagen Group stumbled badly out of the gate when it attempted to integrate computer technology into its cars, starting with the ID. 3 in 2020. It taught China how to build cars and then China taught it how to master digital technology. Maybe the combination will allow Volkswagen to become profitable and thrive in the future? Or not…..