Audi cuts annual targets: sales and margins fall, business in China collapses

With a decline in sales of a good ten percent, the Audi Group slightly increased its operating result in the first half of 2026, but is forced to significantly reduce the forecast for the full year. The Chinese business and the consequences of US tariffs in particular are putting a strain on the balance sheet.

According to the half-year report, group sales fell from 32.573 to 29.177 billion euros. The operating result nevertheless rose slightly from 1,087 to 1,122 million euros, and the operating return on sales improved from 3.3 to 3.8 percent. Audi cites strict cost discipline, lower provisions for CO₂ regulation and declining expenses for restructuring measures as reasons.

Audi recorded a significant increase in net cash flow from 904 to 1,885 million euros, which the company attributes primarily to a positive development in working capital. The previous year’s figure was impacted by the acquisition of shares in Sauber Holding AG.

5 billion less sales expected

Audi is now much more conservatively anticipating sales of 58 to 63 billion euros instead of the 63 to 68 billion originally targeted for 2026. The expected operating margin will be reduced from 6 to 8 percent to 5 to 7 percent. Only when it comes to net cash flow does the target range of 3 to 4 billion euros remain unchanged, which underlines the focus on securing liquidity. With an operating margin of 3.8 percent in the first half of the year, Audi would have to operate significantly more profitably in the second half of the year in order to meet the new guidance.

China and USA burden

Audi delivered 727,245 vehicles worldwide, around 7.2 percent less than in the same period last year (783,531). The decline is concentrated in two regions: In China, including Hong Kong, deliveries fell by around 19 percent to 232,227 vehicles, and the financial contribution from the China business fell from 279 to 73 million euros, a loss of 74 percent. Audi points to intense competition with local manufacturers, lower revenue from the parts business for local production and geopolitical uncertainties. In North America, deliveries fell by almost 17 percent to 82,187 vehicles; US tariffs in particular are putting a strain on business here.

Outside these problem regions, a different picture emerged: In Germany, deliveries rose by a good 4 percent to around 108,000 vehicles, and in Europe excluding Germany by almost 6 percent. Spain recorded an increase of 21 percent, Italy 17 percent and Great Britain 10 percent. “Without China, global deliveries were almost at the previous year’s level,” emphasizes Audi.

E-car boom in Germany and new models

The German demand for electrified vehicles is particularly striking: deliveries of battery-electric models rose by 23 percent to more than 25,000 units, and demand for plug-in hybrids even increased by 147 percent. In Western Europe, Audi recorded an overall increase in orders of 7 percent, and even 117 percent for PHEV models. The new Audi A2 e-tron will be presented in autumn 2026 as a battery-electric entry-level model. The full-size Audi Q9 SUV, tailored specifically for the US market, is scheduled to come to North America and Europe in the fourth quarter of 2026.

Restructuring and pressure on German locations

Audi CFO Jürgen Rittersberger made it clear that the geopolitical environment increased the pressure to act: “In order to survive in international competition, we must realign our business model together with the Volkswagen Group and implement far-reaching structural improvements.” The VW Group board has already presented a comprehensive package of measures to the supervisory board. According to media reports, production capacity at the Neckarsulm plant has already been reduced to 225,000 vehicles per year, around 75,000 fewer than in previous years. Reports of a possible closure after 2030 sparked unrest.

The Audi works council is calling for the consistent implementation of the existing future agreement, which provides for job security until the end of 2033. Almost 3,200 employees gathered in Neckarsulm, and around 800 trade unionists and representatives from IG Metall protested against possible austerity plans. The works council in Ingolstadt declared in solidarity: “Neckarsulm is part of the Audi DNA – this is not being negotiated.” At the same time, Neckarsulm is positioning itself as a future competence center for artificial intelligence and digitalization. No concrete decisions regarding individual locations were announced after the most recent VW supervisory board meeting. The Süddeutsche Zeitung concludes that despite the weak overall situation, Audi is giving the location certain signals of hope and that a closure is apparently not imminent.

Whether the stronger platform sharing within the VW Group, the expansion of high-margin premium electric segments and new digital business models will make the group more resilient will become clear in the second half of the year.

(fpi)