The impairment, which is non-cash, is expected to weigh on Volkswagen’s operating profit in the third quarter of the financial year and comes as Porsche undertakes a major overhaul of its product strategy amid weakening demand in key markets.
Volkswagen, which owns a 75 per cent stake in Porsche, disclosed the expected impairment in a media release to investors following an update to Porsche’s long-term financial plans.
“In connection with its updated long-term planning, Dr. Ing. h.c. F. Porsche AG [the official business title of Porsche] has informed Volkswagen AG about the expected development of its key financial data,” Volkswagen said.
The German auto giant said it had consequently revised its medium- and long-term assumptions for determining the enterprise value of the Porsche business.
“As a result, Volkswagen has updated the medium- and long-term assumptions for determining the enterprise value, including the medium-term corridor of 10 to 15 percent communicated by Porsche,” the company said.
The resulting impairment test is expected to produce a non-cash charge of around €6 billion against goodwill allocated to Volkswagen’s Porsche business segment.
“The impairment test results in a non-cash impairment of around 6 billion euros for Volkswagen AG on goodwill allocated to the Porsche business segment, which will have a negative impact on the Volkswagen Group's operating profit in the third quarter of the current fiscal year,” the company said.
Porsche battles prolonged downturn
The latest charge adds to a difficult period for Porsche, whose financial performance has deteriorated sharply from the record levels seen in previous years.
The luxury marque has faced weaker demand, particularly in China, one of its most important markets, while higher tariffs on imported vehicles have added pressure to its business in the United States.
The challenges have also forced Porsche to rethink its ambitious transition to electric vehicles.
In September last year, then-Porsche chief executive Oliver Blume announced significant changes to the company’s future product programme, including plans to retain combustion-engine models alongside electric vehicles.
Under the revised strategy, the 718 Boxster and Cayman sports cars were expected to receive petrol-powered variants in addition to planned electric versions. Porsche also outlined plans for a new flagship SUV and a model positioned around the size of the Macan, with petrol and hybrid powertrains expected by no later than 2028.
The reversal reflected the changing market environment for electric vehicles and the financial pressures confronting Porsche.
At the time, the changes were reported to be capable of costing Volkswagen about €5.1 billion, while Porsche projected that its operating profit could fall by €1.8 billion in the 2025 financial year.
China, US markets add pressure
Porsche has subsequently continued to face difficult trading conditions.
Demand in China has weakened considerably, while its US business has been affected by increased tariffs on imported vehicles. Together, the pressures have raised questions about the pace and profitability of Porsche’s transition to electric vehicles.
There has also been uncertainty over whether the planned petrol-powered versions of the 718 Boxster and Cayman will ultimately reach production, with reports suggesting Porsche could instead revive the two sports cars exclusively as electric models.
Despite the severe deterioration in profitability, Porsche remained profitable in 2025, recording an operating profit of about €90 million.
That figure, however, represented a dramatic decline from the previous year’s operating result of approximately €5.3 billion, highlighting the extent of the downturn.
Volkswagen profit margin under pressure
The Porsche impairment comes as Volkswagen itself prepares for a significantly weaker profitability outlook.
The group’s operating profit margin is now expected to fall to around one per cent, compared with earlier guidance of as much as four per cent.
Although Volkswagen has not disclosed the precise extent to which it expects Porsche’s own profit to decline during the current year, the €6 billion impairment provides a measure of the financial strain confronting the business.
Because the charge is non-cash, it does not represent an immediate €6 billion cash outflow from Volkswagen. Instead, it reflects a reduction in the accounting value assigned to the Porsche business in Volkswagen’s books.
Job cuts add to Porsche restructuring
Porsche is also preparing for a major restructuring of its workforce as it seeks to reduce costs and adapt its operations to weaker demand.
The company is planning significant reductions to its German workforce, with approximately 8,900 positions expected to be eliminated by the end of 2035.
The restructuring, combined with the revised vehicle strategy and the latest impairment, highlights the scale of the challenges facing Porsche as it attempts to restore profitability while balancing investment in electric vehicles with continued demand for petrol and hybrid models.
For Volkswagen, the Porsche write-down represents another significant financial setback at a time when the wider group is also confronting weaker margins, changing consumer demand and the costly transition towards new vehicle technologies.