Europe’s largest automaker, Volkswagen, is to shed 50,000 jobs by the end of the decade, as it faces falling sales in China and North America and punitive US tariffs imposed by Donald Trump.

The 10-brand group, whose luxury subsidiaries Porsche and Audi are also under pressure, said the jobs would go in Germany, affecting the entire group, as part of a restructuring drive in light of the darkening global business climate.

The group had already struck a deal with German trade unions at the end of 2024 to slash 35,000 jobs by 2030, in part by natural attrition through retirement and other staff departures.

Volkswagen revealed the updated plans as it announced a 54% drop in pre-tax profits. The group has been scaling back its targets for electric vehicle (EV) production in recent months, including at its Italian supercar manufacturer, Lamborghini.

As the US-Israeli military action against Iran stokes market uncertainty and drives up energy prices, Volkswagen warned that global turbulence would negatively affect its outlook.

“Challenges are expected in particular from the macroeconomic environment, uncertainties regarding restrictions in international trade and geopolitical tensions,” the company said.

This would increase “competitive intensity” and volatility on “commodity, energy and foreign exchange markets”, it said in a statement.

The Volkswagen Group chief executive, Oliver Blume, later said the Iran war was not hitting Volkswagen’s supply chain but could affect demand for its premium marques Audi and Porsche.

“We are simply seeing how volatile and fragile our world is, with new issues arising every month,” Blume said, pointing to a potential drag on sales from the conflict in the region, where volumes are modest but margins high.

The fall in profits, to €8.9bn (£6.6bn), was largely “attributable to US tariffs”, the company reported, as well as a costly strategy shift at Porsche, which has postponed its transition to EVs owing to slack demand.

Porsche’s operating profit nearly vanished in 2025, falling by 98% to €90m.

Even before Trump slapped tariffs on foreign carmakers last year, Volkswagen was struggling with flat demand in Europe and the costs of investing in EVs despite disappointing demand and insufficient infrastructure.

Domestic competition ate away at the group’s share in China, the world’s biggest car market. Blume announced “the largest product campaign in our history” there to try to claw back customers.

“After three intensive years of realignment within the Volkswagen Group, we are seeing tangible progress,” Blume said. “At the same time, we are operating in a fundamentally different environment.”

Reuters contributed to this report