(MENAFN) Germany’s largest automaker, Volkswagen Group, is reportedly confronting a potential financial crunch, with internal forecasts indicating a multi-billion-euro cash-flow gap in 2026, according to reports citing company figures.

The company is expected to be around $11.99 billion USD, raising concerns about its ability to fund planned investments and operations. Volkswagen’s half-year 2025 report showed a 33% decline in operating profit compared to the previous year and a negative cash flow of €1.4 billion.

The shortfall has been attributed to weak sales in China, growing competition from Chinese automakers, and tariffs imposed by the United States. “Cuts are now being made practically everywhere – in marketing, sales, and some investments,” a source said. Some holdings may need to be sold to raise funds for new model development and advanced technologies, with senior managers describing the situation as “particularly fatal” during the shift from combustion engines to electric vehicles.

Germany’s automotive sector is navigating one of its most challenging periods in decades. Volkswagen, BMW, and Mercedes-Benz have all reported declining deliveries in 2025, as domestic demand in China weakened while local electric vehicle makers, including BYD, gained market share.

European carmakers are also contending with U.S. trade measures. 25% tariffs on European-built cars have impacted sales, and although an EU-US agreement in August reduced the maximum rate to 15%, lingering uncertainty continues to affect export strategies and investment decisions.

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