Volkswagen has cut its profit guidance, blaming a €6bn writedown on the valuation of its stake in Porsche, a continuing downturn in China and rising restructuring costs. Shares in Europe's largest carmaker fell as much as 7 per cent on Friday afternoon after it said it now expected an operating profit margin of 1 per cent for this year, down from its previous range of 4 to 5.5 per cent. The German group warned that the total negative impact on its earnings could reach €10bn.

The group recently struck a surprise deal with unions for a historic restructuring that could lead to the loss of 100,000 jobs and the ending of vehicle production at four German plants. UBS had estimated that the restructuring costs could reach up to €7bn, while Bank of America forecast up to €10bn in gross charges.

In a statement on Friday, the company said its earnings outlook "will be impacted by a further deterioration in the market environment, especially in China, as well as an accelerated shift in demand in favour of battery-electric vehicles." "The world's largest single market has slumped by 20 per cent, with no consolidation in sight. We cannot escape this trend," said chief financial officer Arno Antlitz.