Volkswagen’s balance sheet figures are one thing above all: a document of escape. The group is shrinking in Germany and growing elsewhere. The steep curve through which the state-owned car company is hurtling under the public eye is precisely the change in strategy that the entire German industry is currently experiencing. Some will do it more silently, some will do it faster, some will fail.

Surprised by the VW-Report can only be those who have been deep diving in the Antilles in the past few months. Sales remained almost stable in 2025 at 321.9 billion euros, but the operating result fell to 8.9 billion euros, 53 percent below the previous year; the operating margin fell to 2.8 percent. That means: From a VW worth 40,000 euros, an operating result of 1,120 euros was left over last year. The group last achieved a similarly low return in 2016 amid the diesel scandal.

The shock doesn’t happen

At the same time, VW is reporting the net cash flow of 6.4 billion euros in the automotive sector, which has been talked about for a few weeks and which, on the surface, provides relief. As a result, the share price has already temporarily risen by two percent. So VW is in a bad position, but not more catastrophic than feared. The company had prepared its opponents and fans that the Champions Tournament would not happen this year.

Still, there are profound insights. There is that one Sports car icon crash Porschewhich must hurt everyone who has gasoline in their blood. In the so-called “Brand Group Sport Luxury”, the operating result collapsed from 5.3 billion to just 90 million euros, and the margin fell from 14.5 to 0.3 percent. This is not a damper, this is a collapse.

VW itself cites several reasons for this: the fundamentally changed market environment in China, US tariffs, the sluggish demand for e-mobility and the strategic realignment of the business. The fact is: Porsche has it E-course slowed down due to weak demand, and this change in strategy put a massive strain on the group. Porsche was once VW’s earnings turbo; In 2025, Porsche will be the concrete block on its leg.

Porsche: concrete block instead of turbo

Also the other premium brand, Audirolls in reverse gear. In the “Brand Group Progressive” sales increased slightly to 65.5 billion euros, but the operating result fell by 13.6 percent to 3.4 billion euros and the operating margin fell to 5.1 percent. VW explicitly mentions US tariffs for this. What helped was that Audi was able to conclude a pact for the future with the works council in 2025: more productivity, more speed, more flexibility, plus a socially acceptable reduction of up to 7,500 jobs in indirect areas by 2029. Audi didn’t crash because of this, Audi is descending with a controlled emergency landing.

The high cash flow is not remarkable because the operating business suddenly went well. On the contrary: The group itself explained in January that the positive deviation was primarily due to lower working capital and lower than expected investments in property, plant and equipment and research and development. Translated: less capital is tied up in goods lying in the warehouse, more cautious spending, more balance sheet hygiene. That’s legitimate, but it’s not proof of a strong business model.

Bonuses for those up there, pain for those down there

This is precisely why the bonus question is politically explosive. The workforce accepted cuts in the “Christmas compromise”; Around 120,000 German VW employees foregone part of their wages as part of the restructuring package. At the same time, the variable remuneration of the Executive Board also depends on cash flow. Because it was now significantly better, the basis for board bonuses is back. Works council boss Daniela Cavallo sharply criticized this. Your criticism hits the mark: the managers save money at the expense of the workforce and earn handsomely from it. CEO Oliver Blume will receive a short-term bonus of around two million euros for the past financial year.

The recipe that Blume and his team have prescribed for VW to combat the crisis looks like this: internal savings are made, external investments are made. Tough cost-cutting programs are underway within the group. There will be around 50,000 jobs in Germany by 2030, 35,000 of which have already been named in the VW compromise from the end of 2024, and further cuts are now being added via Porsche and other programs.

At the same time, VW is sticking to investments in the future: the investment rate in the automotive sector was still 11.8 percent in 2025 despite the austerity measures. But most of the money doesn’t end up in Germany. The group is investing in electrification with a 10 billion euro program that will primarily benefit Spanish plants. A major model offensive is underway in China with more than 20 electric and electrified models that will be developed there by 2027, and through the joint venture with US partner Rivian, a total of up to 5.8 billion dollars will flow into software that will be developed there by 2027.

The document of the escape

So the escape document looks like this: VW is shifting capital and priorities from the old existing business to new technology centers and new markets. Management sells this as “resilience” and “transformation”. In reality it means: The logic of returns forces the company to shrink where costs are high and conflicts are great, and to grow where development is possible faster and cheaper.

This is particularly visible in China. VW wants to build the majority of vehicles offered in China on a new platform by 2030; It enables development that is 30 percent faster and 40 percent cheaper than its German counterpart. According to VW, a new electric model can be developed in China for up to 50 percent cheaper. This is not a side note. This is the shifting of the industrial heart.

What hurts about it is that the renovation is being paid for here, but the growth is occurring elsewhere. The plants in this country remain politically and historically important for VW, but they are no longer the preferred location for the future. Dresden ends as a vehicle location, Osnabrück loses perspective, Wolfsburg is cut down. Audi is running its own productivity and reduction program in Ingolstadt and Neckarsulm. Porsche restructures. All of this is the German perspective of transformation. It is not the crashing clear-cutting, but the socially cushioned erosion.

Germany is becoming a sideshow for VW

And that is the real message of this balance sheet: it is not the decline in profits that is shocking. Not even the Porsche crash and the manager bonuses. But the direction of the recovery is what counts: VW will probably get through the crisis, but only through the internationalization of industrial value creation, in which Germany only plays a minor role. And that may actually be what is flourishing for German industry as a whole: restructuring at home, expansion abroad, securing the company – and the gradual loss of the location that made it great. Germany remains the headquarters, brand, co-determination model – and company museum.