This summer of 2026 brings a deep chill to the global automotive industry. From Wolfsburg to Nagoya, Detroit to Turin, multinational giants have released their 2025 financial reports, revealing a landscape of severe distress: Volkswagen's profits halved with 50,000 job cuts, Toyota's revenue up but profits down, Honda's first annual loss since its listing, Stellantis NV posting a massive loss exceeding 170 billion yuan, and General Motors' net profit plunging 55%. This is not merely a case of individual corporate missteps but a structural earthquake shaking the entire traditional auto sector.
Widespread Profit Alarms
According to company financial reports and performance announcements, profit warnings echoed across multinational automakers for the 2025 fiscal year. On the German front, Volkswagen delivered its weakest performance since the 2016 "dieselgate" scandal: operating profit plummeted to 8.87 billion euros, down 53.5% year-on-year, with net profit after tax crashing from 12.4 billion to 6.9 billion euros. Revenue of 321.9 billion euros and global deliveries of approximately 9 million vehicles were largely flat compared to the previous year—cars sold, but profits not made, with the margin hitting a freezing low of 2.8%. Porsche's net profit was a mere 431 million euros, a dramatic 88% decline.
For Japanese automakers, Honda forecasts a net loss attributable to owners of the parent of 420 to 690 billion yen for the 2025 fiscal year, marking its first annual loss since its 1957 listing, with a provision of up to 2.5 trillion yen related to canceling some US EV development and launch plans—roughly equivalent to its total net profit over the past three years. Nissan reported a net loss of 250 billion yen for the first nine months, with a full-year forecasted loss of 650 billion yen, marking a second consecutive year of losses. Toyota expects full-year net profit of approximately 3.57 trillion yen, down 25%, which is considered relatively better among the giants. Subaru's net profit fell 73.8%, while Mazda and Mitsubishi Motors both swung from profit to loss.
Among US automakers, General Motors' net profit fell 55% to $2.697 billion, including a net loss of $3.31 billion in the fourth quarter alone. Ford reported a net loss of $8.2 billion for 2025, compared to a $5.9 billion profit in 2024. Stellantis NV recorded its first annual loss since its 2021 formation: a net loss of 22.3 billion euros (approximately 180.4 billion yuan), with full-year provisions reaching as high as 25.4 billion euros. South Korea's Hyundai and Kia saw net profits decline by 21.7% and 22.7%, respectively. Exceptions were few: BMW's net profit of 7.451 billion euros dipped only 3%, while Suzuki's net profit bucked the trend with growth.
Profit Per Vehicle Deteriorates Across the Board
Statistics based on company data and QUICK FactSet show that for a sample of seven major automakers—the top five by sales plus Tesla Motors and BYD—profit per vehicle deteriorated across the board for the 2025 fiscal year. Tesla Motors, once synonymous with strong profitability, saw its per-vehicle profit drop from 557,000 yen the previous year to 348,000 yen (approximately 14,600 yuan), a decrease of about 40%, though it remained the leader for the fifth consecutive year. Toyota followed closely with 341,000 yen, down about 20% year-on-year—the gap between the two, which exceeded 100,000 yen in the 2024 period, has now narrowed to within 10,000 yen. BYD ranked third. Stellantis NV and Ford, which had per-vehicle profits of around 150,000 yen in the 2024 period, both turned to per-vehicle losses in 2025.
Three Major Factors Behind the Crisis
The first factor is the "secondary blow" from US tariffs. Tariff costs in Toyota's 2025 consolidated results reached a staggering 1.38 trillion yen, becoming the primary cause for the decline in operating profit. Tariff costs similarly squeezed profits at Volkswagen and General Motors. BMW stated directly that tariffs reduced its automotive segment's EBIT margin by approximately 1.75 percentage points in the third quarter. Hyundai and Kia were also dragged down by US tariffs on South Korean car imports, with net profits falling over 20%.
The second factor is the intensifying competition in the Chinese market. Chinese domestic brands have risen strongly with advantages in new energy and intelligent technology, squeezing the market share of joint venture brands from nearly 40% three years ago to 35.4%. The once-lucrative "cash cow" effect for many brands has been severely eroded. It is noted that the automakers suffering the most severe setbacks in this round of financial reports are precisely those losing ground in the Chinese market.
The third factor is the clash between aggressive pure-electric strategies and market reality. Slowing EV demand, coupled with relaxed environmental regulations in Europe and the US and the termination of the US EV tax credit, has forced companies to pay a hefty price for their previously overzealous bets. Honda's 2.5 trillion yen provision, Stellantis NV's full-year provision of 25.4 billion euros (its CEO stated the 2025 results reflect "the price of overestimating the speed of the energy transition"), and recent announcements of multi-billion-dollar EV writedowns by Ford and General Motors exemplify this.
Underlying Structural Challenges
Several structural problems have surfaced. The first is revenue growth without profit growth; Volkswagen's deliveries and revenue remained flat while its net profit nearly halved, painting a picture of "slight volume growth but sharp profit decline" in the global auto market. The second is the inability to pass on costs; amid global inflation, US consumers are highly sensitive to price increases, making it difficult for manufacturers to pass on tariff costs in the key North American market, forcing them to absorb the impact. The third is rising sales incentives; companies lacking strong product lines like hybrid vehicles face particular difficulty as dealer incentives to lower prices continue to increase, further eroding profits. The fourth is shrinking ancillary income; with relaxed environmental rules, Tesla Motors' revenue from selling carbon credits to rivals fell from $2.9 billion in the 2024 period to $1.7 billion in 2025, a drop of about 40%. The fifth is overcapacity and workforce surplus; production cuts exceeding plans lead to idle equipment and excess personnel, with fixed costs further consuming profits.
Strategies for Survival
Automakers are responding with drastic measures. The path of workforce reduction is evident, with Volkswagen announcing plans to cut 50,000 jobs in Germany by 2030, one of the largest layoff plans in the European auto industry in recent years, and Nissan planning to cut 20,000 positions globally. Plant closures and capacity contraction are another route, with Nissan reducing its assembly plants from 17 to 10; selling assets and compressing capacity have become "must-do" options for giants. Preserving cash is critical, as seen with Stellantis NV suspending its 2026 dividend and planning to issue up to 5 billion euros in hybrid bonds, ending the year with 46 billion euros in available industrial liquidity. There is also a strategic recalibration, scaling back pure-EV investments and returning to a "multi-energy" approach; Stellantis NV is re-launching internal combustion and hybrid products, while Toyota has managed to control its profit decline by relying on strong hybrid vehicle demand. Finally, leveraging Chinese partnerships is a tactic, with Stellantis NV already cooperating with Leapmotor and reportedly seeking collaborations with Xiaomi and Xpeng.
Outlook for 2026
Analyses and company guidance suggest that per-vehicle profits for global large automakers are likely to continue declining in the 2026 fiscal year. First, tensions in the Middle East are disrupting transportation networks, forcing some manufacturers to cut production beyond plans; idle equipment and surplus staff will further worsen profitability. Second, rising material prices remain difficult to pass on to consumers. Third, China's NEV purchase tax exemption changes from full to half starting in 2026, adding another variable beyond the price war (BYD's net profit for January-March 2026 already fell 55%). Fourth, Stellantis NV itself expects its 2026 net tariff expense to still reach 1.6 billion euros. As the old logic of scaling for growth fails and massive electrification investments continue to misalign with market demand, the answer for giants navigating this cycle may be singular: survival is paramount above all else.
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