How Porsche is killing volkswagen

EUR/JPY

Key zone: 180.00 - 181.50

Buy: 182.00 (against a strong positive fundamental backdrop); target 183.50-185.00; StopLoss 181.30

Sell: 178.50 (on a decisive break above 180.00) ; target 176.50-175.00; StopLoss 179.20

The crisis of the premium brand is turning into a problem for the entire European automotive model. For Volkswagen, Porsche’s unprofitability has turned out to be far deeper than an ordinary deterioration in the results of an individual brand.

The problem affects Germany’s exports, investment, and industrial production — and through them becomes a factor for the European economy and, to a more limited extent, for the euro.

A reminder:

Volkswagen Group is writing down around €6 billion of goodwill related to Porsche, while estimating the total volume of special effects in 2026 at approximately €10 billion. The operating margin forecast has been lowered from 4–5.5% to no more than 1%. Excluding special effects, the figure would have been around 4%.

In 2025, Porsche indeed experienced a sharp deterioration in its financial performance. Revenue declined to €36.27 billion from €40.08 billion a year earlier, operating profit collapsed from €5.64 billion to €413 million, and the operating margin fell from 14.1% to 1.1%. Deliveries declined 10.1% to 279,449 vehicles.

China became the main test of competitiveness. In 2025, Porsche delivered 41,938 vehicles to customers — 26.3% fewer than a year earlier. The company directly links the decline to pressure on the premium segment and intense competition, particularly in fully electric vehicles.

However, it would be a mistake to consider Porsche a permanently broken asset already.

In the first half of 2026, the situation improved: operating profit rose 33.9% to €1.35 billion, while the operating margin recovered to 7.8% from 5.5% a year earlier. At the same time, revenue declined 5.1% to €17.23 billion, while deliveries fell 16.5% to 122,306 vehicles. Porsche maintained its full-year 2026 forecast: revenue of €35–36 billion and an operating margin of 5.5–7.5%.

The Chinese market is changing the structure of global automotive competition. For Porsche, this is particularly painful precisely because the premium segment no longer guarantees the same protection from competition as before.

For Volkswagen, the problem is even broader. The mass-market manufacturer is simultaneously losing ground in one of the world’s largest automotive markets and incurring significant costs to adapt its business.

The automotive industry is far more important to Germany than its share of the stock market index suggests.

If the automotive sector fails to regain its former competitiveness, the recovery of the German economy becomes less sustainable.

The industry’s repricing is also visible in the stock market. As of August 31, the STOXX Europe 600 Automobiles & Parts was down 8.5% since the beginning of 2026 and 9.7% over the previous 12 months. Germany accounts for 45.3% of the sector index’s market capitalization, so the problems of German automakers carry significant weight for the entire European automotive sector.

The market now demands more from European OEMs than simply a recovery in sales. Evidence is needed that they can compete with Chinese manufacturers simultaneously on EV production costs, software, the technology cycle, and the speed of bringing new models to market.

And What Is the Result?

The Porsche story matters now not because one premium brand is capable of bringing down Volkswagen. It shows that the previous economic model of the German auto industry is no longer working automatically.

Porsche itself is indeed too small to determine the direction of EUR/USD. But Germany’s automotive complex is already a macroeconomic factor.

The transmission channel looks as follows:

weaker auto industry → weaker exports and investment → pressure on industrial production → weaker German growth → weaker Eurozone growth → less room for restrictive ECB monetary policy → fundamental pressure on the euro.

However, this channel remains secondary. For EUR/USD, the differential between expected Fed and ECB rates, inflation, government bond yields, energy prices, and geopolitical risks are significantly more important.

Therefore, automotive statistics are better used as an additional fundamental filter rather than as a standalone signal to sell the euro.

So we act wisely and avoid unnecessary risks.

Profits to y’all!