logo
Volkswagen profits tumble as tariffs weigh on auto industry

Volkswagen profits tumble as tariffs weigh on auto industry

Al Jazeeraa day ago
Volkswagen has reported $1.5bn in losses in the first half of the year because of tariffs imposed by United States President Donald Trump.
The German carmaker reported a hit as the company revised its full year sales and profit margin forecasts.
Volkswagen, Europe's biggest carmaker, now expects this year's operating profit margin to be 4 percent to 5 percent, compared with a previous forecast of 5.5 percent to 6.5 percent. Full-year sales, earlier seen up to 5 percent higher, are expected to be level with the previous year.
Investors had largely anticipated a guidance cut after the company held off on assessing the damage from tariffs in the previous quarter and appeared calmed by assurances that the group's luxury brands Audi and Porsche would recover next year after heavy losses in the second quarter.
CEO Oliver Blume told investors the company must accelerate its cost-cutting efforts in response to the tariffs.
'We need to shift our cost efforts into high gear and accelerate implementation. After all, we cannot assume that the tariff situation is only temporary,' Blume said.
Global carmakers have booked billions of dollars in losses and some have issued profit warnings due to US tariffs. The European industry is also facing stiffening competition from China and domestic regulations aimed at speeding up the electric vehicle transition.
Tariff hit
Volkswagen is the third automaker this week to report a hit to their profits because of tariffs. Michigan-based General Motors reported that tariffs cost it $1.1bn in the second quarter. Stellantis, the maker of brands including Jeep and Fiat, reported a $2.7bn loss for the first six months of 2025.
VW and its competitors are pressing European trade negotiators to strike a deal to reduce a 25 percent US tariff they have faced since April.
EU diplomats have indicated that the bloc could be moving towards a broad 15 percent tariff as it seeks to avoid a threatened 30 percent levy from August 1. A deal struck between the US and Japan this week raised hopes for a similar agreement for Europe, boosting carmakers' shares.
VW finance chief Arno Antlitz said Volkswagen's profit margin would land roughly in the middle of its guidance with a Japan-style deal, which had a 15 percent tariff rate.
He warned, however, that the clock was ticking on finding a deal. 'We are already in July, so the longer we go into the second half of the year, the more we tend to the lower end of the guidance,' he said.
Antlitz declined to comment on price increases when pressed by investors on how the company planned to protect its margins against tariffs.
Volkswagen reported an operating profit of $4.4bn (3.8 billion euros) in the quarter ended June 30, down 29 percent on the previous year. It cited tariffs and restructuring costs for the decline as well as higher sales of lower-margin all-electric models.
While Volkswagen was able to boost deliveries globally by 1.5 percent in the first six months of 2025, the group saw a decline of almost 10 percent in deliveries to the US.
North American sales revenue accounted for 18.5 percent of the carmaker's global sales in the first half.
Car sales data for June highlighted a broader slowdown in Europe's struggling auto sector – and showed Volkswagen among the laggards as the company undergoes a major overhaul to cut more than 35,000 jobs by the end of the decade.
Porsche and Audi are particularly exposed to US tariffs given they have no production there and rely heavily on exports.
In the second quarter, Porsche's operating result plunged by more than 90 percent to 154 million euros ($181m) and Audi's by 64 percent to 550 million euros ($647m).
'For both companies, Audi and Porsche, we are expecting that we will touch the bottom this year with positive momentum from 2026 onwards,' Blume said.
Despite the losses, VW's stock is on the upswing. As of noon in New York (16:00 GMT), it was up more than 3 percent since the market opened and up more than 12 percent over the last five days in trading.
The stocks of other carmakers that also reported tariff hits are trending upwards. Stellantis is up 3.9 percent for the day. GM is about even – up by only about 0.2 percent.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

With Trump go-ahead, Skydance and Paramount to complete merger in August
With Trump go-ahead, Skydance and Paramount to complete merger in August

Al Jazeera

time19 hours ago

  • Al Jazeera

With Trump go-ahead, Skydance and Paramount to complete merger in August

The entertainment company Paramount Global is expected to close its $8bn merger agreement with Skydance Media on August 7, a date that marks two weeks after the administration of President Donald Trump gave its approval. On Friday, the two companies announced the final stage of the year-long deal, which was first announced in July 2024. The merger is considered a massive shake-up in the media landscape of the United States, drawing to a close the reign of the powerful Redstone family over the Paramount entertainment empire. But the merger has garnered even more attention in recent weeks for its political backdrop. On Thursday, the Federal Communications Commission (FCC) gave the green light for the merger to go forward, after a series of moves under Paramount that were widely interpreted as concessions to the Trump administration. The FCC is technically an independent agency of the federal government, but since taking office in January for his second term, President Trump has sought to bring such agencies under his influence, including by appointing loyal allies to their leadership. That put the fate of the Paramount-Skydance merger in question, particularly given Trump's combative relationship with CBS Broadcasting Inc, one of Paramount's premier properties. Conflicts over content Trump has long taken an adversarial approach to the news media, and CBS's flagship news programmes were no exception. Some of those tensions came to a head in the final weeks of the 2024 presidential election, when Trump, a Republican, was facing off against Democratic contender Kamala Harris. The TV news magazine 60 Minutes had a tradition of interviewing each of the major party nominees for the presidency in the lead-up to the vote, and it had invited both Trump and Harris to participate. Harris accepted the invitation, but 60 Minutes said Trump cancelled. Steven Cheung, a spokesperson for Trump, disputed that characterisation. 'There were initial discussions, but nothing was ever scheduled or locked in,' Cheung wrote on social media. 'They also insisted on doing live fact checking, which is unprecedented.' The back-and-forth escalated when 60 Minutes aired two different cuts from its interview with Harris. One version, which aired on a sister programme Face The Nation, featured more of Harris's answer about her stance towards Israel. The other version, which aired on the 60 Minutes broadcast, was shorter. Trump called the different edits evidence of deceptive reporting tactics and filed a lawsuit against Paramount, CBS's parent company. 'CBS used its national platform on 60 Minutes to cross the line from the exercise of judgment in reporting to deceitful, deceptive manipulation of news,' his court filing alleged. 'That is false,' 60 Minutes responded in a statement to its website. 'When we edit any interview, whether a politician, an athlete, or movie star, we strive to be clear, accurate and on point. The portion of her answer on 60 Minutes was more succinct, which allows time for other subjects in a wide ranging 21-minute-long segment.' While many media experts expected Paramount to prevail on the merits of the case, the company instead sought to negotiate an end to the case. Earlier this month, it agreed to pay $16m to Trump, to go to his future presidential library. Shortly thereafter, another top CBS show, The Late Show with Stephen Colbert, revealed it had been cancelled, allegedly for financial reasons. But the timing and unexpected nature of the cancellation drew speculation that it might have been an attempt to appease Trump and streamline the merger, given the fact that Colbert frequently lambasted the Republican president on his show. Trump himself posted on Truth Social, 'I absolutely love that Colbert' got fired. His talent was even less than his ratings.' The Late Show was consistently the top-rated late-night comedy show, and it had won a Peabody Award and multiple Emmy nods. South Park TV show takes aim Within weeks of both the 60 Minutes lawsuit settlement and the cancellation of The Late Show, the FCC gave its blessing to the merger between Paramount and Skydance. Under the merger, Skydance founder David Ellison, the son of Oracle Corporation CEO Larry Ellison, is expected to helm operations. Upon the merger's approval, Trump's appointee to lead the FCC, Brendan Carr, released a statement echoing some of the president's criticisms of major news outlets. He also hinted that the merger would result in changes to CBS's news output. 'Americans no longer trust the legacy national news media to report fully, accurately, and fairly,' he wrote. 'It is time for a change. That is why I welcome Skydance's commitment to make significant changes at the once storied CBS broadcasting network.' 'In particular, Skydance has made written commitments to ensure that the new company's programming embodies a diversity of viewpoints from across the political and ideological spectrum.' To ensure compliance with that commitment, Carr said an ombudsman would be appointed to the media giant for a period of at least two years. Carr added that the merger between Skydance and Paramount would also bar the new mega-company from implementing diversity, equity and inclusion (DEI) policies, which are designed to create an equal playing field for people regardless of age, gender, race, ethnicity, religion or ability. But hours after the FCC granted its approval, the Paramount-owned channel Comedy Central aired an episode of the animated series South Park that mocked President Trump and satirised its parent company's $16m settlement. In one scene, an animated Jesus attempts to warn the show's characters about Trump. 'The guy can do whatever he wants now that someone backed down, OK?' the animated Jesus says. 'You guys saw what happened to CBS? Yeah, well, guess who owns CBS? Paramount! You really want to end up like Colbert?' The Trump administration has since blasted the show as irrelevant.

Donald Trump set for trade talks with Europe as he arrives in Scotland
Donald Trump set for trade talks with Europe as he arrives in Scotland

Al Jazeera

time19 hours ago

  • Al Jazeera

Donald Trump set for trade talks with Europe as he arrives in Scotland

United States President Donald Trump has arrived in Scotland, where he is set to meet with European and British leaders for trade negotiations and visit his golf courses. Trump landed in the United Kingdom late on Friday, where he will hold talks with Prime Minister Keir Starmer and European Commission President Ursula von der Leyen. Before departing from the White House, the US president told reporters that he will discuss the trade deal between Washington and London with Starmer and 'maybe even improve it'. Von der Leyen said earlier on Friday that she had a 'good' call with Trump. 'We have agreed to meet in Scotland on Sunday to discuss transatlantic trade relations, and how we can keep them strong,' she said in a social media post. Shortly after coming into office, Trump imposed tariffs on imports from across the world, and he invited countries to negotiate bilateral deals with the US to avoid or lessen any further trade barriers. The UK agreed to a trade agreement with the US in June that expanded access to American goods in the British market. The deal also set the tariffs on the first 100,000 UK vehicles exported to the US annually at 10 percent. But the US trade war with the European Union has, by contrast, intensified. Earlier this month, Trump announced 30-percent tariffs on EU imports starting on August 1. European leaders have expressed willingness to negotiate a deal while also threatening to impose their own trade measures against the US. Trump said on Friday that the prospects of securing a trade deal with the EU are at a '50-50 chance, maybe less than that'. 'It'll be a deal where they have to buy down their tariffs,' he said. Beyond economic negotiations, Trump is expected to visit his golf courses in Aberdeen and Turnberry in Scotland, where he said he will host Starmer for dinner. The US president — whose mother was Scottish — is expected to face protests as he moves around Scotland. A group dubbed the Stop Trump Coalition has announced plans on Saturday for protests that it described as a 'festival of resistance', featuring environmental and anti-war advocates. 'Donald Trump may shake hands with our leaders, but he's no friend of Scotland,' Alena Ivanova, a campaigner with the group, said in a statement. 'We, the people of Scotland, see the damage he has done – to democracy and working people in the US, to the global efforts to tackle the climate crisis, to the very principles of justice and humanity.' The daily newspaper The National, which advocates for Scottish independence, described Trump's visit in a front-page headline as: 'Convicted US felon to arrive in Scotland'. Trump's visit to Scotland comes as he faces mounting pressure at home over his ties to the late sex offender Jeffery Epstein. In the UK, Starmer will meet Trump amid growing calls — including from within his own Labour Party — for London to recognise a Palestinian state amid the Israeli-imposed starvation crisis in Gaza. Earlier on Friday, Trump dismissed an announcement by French President Emanuel Macron that Paris will recognise Palestine's statehood. 'Here's the good news: What he says doesn't matter,' Trump told reporters. 'It's not going to change anything.'

Meta to suspend political advertising as EU transparency law looms
Meta to suspend political advertising as EU transparency law looms

Al Jazeera

timea day ago

  • Al Jazeera

Meta to suspend political advertising as EU transparency law looms

Meta will suspend political and social issue advertising on its platforms in the European Union starting in October. Facebook and Instagram's parent company announced the new policy change on Friday, citing legal uncertainty about the bloc's new rules on political advertising. The Silicon Valley-based social media giant is following in the footsteps of Alphabet, Google's parent company, which made the same decision in November. The EU legislation, called the Transparency and Targeting of Political Advertising (TTPA) regulation, which will apply from October 10, was prompted by concerns about disinformation and foreign interference in elections across the 27-country bloc. The law requires Big Tech companies to clearly label political advertising on their platforms, who paid for it and how much, as well as which elections are being targeted, or risk fines up to 6 percent of their annual turnover. 'From early October 2025, we will no longer allow political, electoral and social issue ads on our platforms in the EU,' Meta said in a blog post. 'This is a difficult decision – one we've taken in response to the EU's incoming Transparency and Targeting of Political Advertising (TTPA) regulation, which introduces significant operational challenges and legal uncertainties,' it said. Meta said the EU rules would ultimately hurt Europeans. 'We believe that personalised ads are critical to a wide range of advertisers, including those engaged on campaigns to inform voters about important social issues that shape public discourse,' it said. 'Regulations, like the TTPA, significantly undermine our ability to offer these services, not only impacting effectiveness of advertisers' outreach but also the ability of voters to access comprehensive information.' Meta's Facebook and Instagram are currently being investigated by the European Commission over their suspected failure to tackle disinformation and deceptive advertising in the run-up to the 2024 European Parliament elections. The EU probe is under the Digital Services Act, which requires Big Tech to do more to counter illegal and harmful content on their platforms or risk fines of as much as 6 percent of their global annual turnover. ByteDance's TikTok is also in the EU crosshairs over its suspected failure to tackle election interference, notably in the Romanian presidential vote last November. Meta's political advertising has long been a concern in the United States, as well. Last week, CEO Mark Zuckerberg settled a lawsuit brought on by shareholders over alleged privacy violations. The suit alleged that the company failed to comply with a Federal Trade Commission settlement in 2012 in efforts to protect consumer privacy. The lawsuit came amid the 2018 Cambridge Analytica scandal in which the social media giant gave user data to the firm – without their consent – for political advertising purposes.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store