Volkswagen AG slashed its profit forecast after a sharp contraction in China and a €6 billion ($6.9 billion) writedown tied to Porsche AG, deepening concerns about the global auto industry. Europe’s biggest carmaker now expects an operating margin of no more than 1%, citing the accelerating shift to EVs in Europe as another drag. Shares slumped 7.5%, triggering a selloff in automakers including BMW AG, Ford Motor Co. and Stellantis NV.

The manufacturer had previously expected a margin of at least 4%. Total charges this year are about €10 billion, including restructuring costs and asset writedowns in China. Excluding those, the operating margin would be around 4%. CFO Arno Antlitz said, “But even that is not enough to invest forcefully in the future. The financial development shows: We have no time to lose.”

The broad pullback highlights industry strains: weaker pricing, costly EV investment, and pressure from Chinese rivals. In June, BMW cut its expectations for an operating return as low as 1%. The warning deepens the challenge for CEO Oliver Blume, who is overhauling the company as its former growth engines falter. VW recently agreed to potential job cuts of 100,000 globally, while reducing factory capacity in Germany.

China earnings have slumped as domestic manufacturers gain share, and the market has contracted by about 20%, with no stabilization in sight. Porsche is preparing a capital markets day on Oct. 7 for updated targets. VW’s writedown followed revised assumptions for Porsche’s valuation. Faster EV growth in Europe, especially at the Volkswagen and Audi brands, is also diluting earnings as battery-powered models have lower margins.