Volkswagen's India Tax Standoff and China EV Push Collide With a €10 Billion Restructuring Bill

JSW seeks $1.4B tax liability absorption from VW as ID. Unyx 09 pre-sales open in China; recall covers over 4 million vehicles.

Volkswagen's global growth blueprint is being squeezed from two directions at once. In India, a demand from local partner JSW Group for the Wolfsburg automaker to absorb a tax liability of USD 1.4 billion has thrown negotiations over a planned joint venture into disarray, according to media reports. At the same time, the company is pressing ahead with an accelerated model offensive in China, where pre-sales for the electric fastback ID. Unyx 09 opened after series production began on September 24, with a market launch slated for the end of October.

The Indian dispute lands at an awkward moment. Volkswagen has been counting on the subcontinent as a key pillar to offset persistent weakness in China, and taking on additional tax risk in the billions runs against a management posture that has grown notably cautious about foreign commitments. The group's home-market burdens are already heavy: roughly two weeks ago it cut its earnings guidance sharply, citing high restructuring costs and the announced job reductions. Since that revision, the stock has shed 11.6 percent.

A €10 Billion Provision and a Recall Covering Over 4 Million Vehicles

Special charges for the full year 2026 are expected to total around EUR 10 billion, of which roughly EUR 900 million had already been booked in the first half. That drag on the balance sheet helps explain why executives are reluctant to make concessions to overseas cooperation partners. Operating troubles are piling up in parallel. Reuters reports that Volkswagen must manage a worldwide recall over a defective steering mounting bolt, a technical fix affecting more than 4 million vehicles — among them 2.16 million units of the core VW brand and 700,000 Audi Q3 models.

Decisions closer to home are equally consequential. A review meeting with IG Metall over the 2024 collective agreement is scheduled for next Wednesday. On the executive floor, Erika Rasch takes over the human resources and labour relations portfolio on October 1, tasked with steering the workforce through the announced austerity drive.

Xpeng Tie-Up Bears Fruit as German Market Share Erodes

The China offensive offers a counterweight. Developed with local partner Xpeng in roughly 24 months, the ID. Unyx 09 targets the country's fiercely competitive segment. Pre-sale pricing starts at 199,900 yuan for the rear-wheel-drive variant producing 230 kW, while an all-wheel-drive version with an added 140-kW front motor begins at 249,900 yuan. The limousine, just over five metres long, carries a CATL lithium iron phosphate battery with a capacity of nearly 92 kWh. Range reaches up to 755 kilometres on China's CLTC cycle, and the 5C charging system is designed to take the pack from 10 to 80 percent in under twelve minutes at compatible stations — the first deployment of 5C technology on the group's core brand.

That technological catch-up unfolds against a stark backdrop at home. Research by Ferdinand Dudenhöffer shows German automakers' share of the Chinese market falling from 22.2 percent in 2023 to 16.4 percent in 2025. Tensions over German production capacity are intensifying simultaneously. The supervisory board is deliberating far-reaching savings programmes, and media reports suggest manufacturing sites including Hannover, Emden, Zwickau and Neckarsulm are on the table. Der Spiegel reported that vehicle production at affected plants could be phased out gradually through the end of 2034. VDA president Hildegard Müller said existing factories in Germany are not sustainable in their current structure and must be opened up to foreign manufacturers.

Valuation Under Pressure

The market is reflecting the operational strain and transformation costs. The preference share closed Friday's Xetra session at EUR 71.90, leaving it down 31 percent since the start of the year and just 3.9 percent above its 52-week low. Whether new models such as the ID. Unyx 09 can durably reverse the trend in China — the group's single most important market — remains a central question for the broader overhaul. The coming days should reveal whether Volkswagen can regain stability at the negotiating table in Asia and with its unions.