Volkswagen cuts 2025 guidance after $1.5-billion tariff hit in first half
Reuters has reported that the German auto OEM booked billions of dollars of losses and has issued profit warnings due to US import tariffs. The European industry is also facing stiffening competition from China and domestic regulations aimed at speeding up the electric vehicle transition. Volkswagen, which is the biggest carmaker in Europe, now expects the operating profit margin of 2025 to be between four and five per cent, compared with a previous forecast of 5.5 per cent to 6.5 per cent. Volkswagen's full-year sales, earlier seen up to five per cent higher, are expected to be level with the previous year.
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To cope with this situation, the automaker is aiming to accelerate its cost-cutting efforts, which have been planned 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," said Volkswagen Group CEO Oliver Blume.
The company's earnings dropped by 29 per cent in the second quarter of this year owing to the tariffs. Volkswagen reported an operating profit of 3.8 billion euros in the quarter ended June 30, recording a 29 per cent slump compared to the previous year. The OEM has cited reasons like tariffs and restructuring costs, as well as higher sales of lower-margin all-electric models, for this slump in earnings.
While Volkswagen as a solo brand was able to boost its car deliveries globally by 1.5 per cent in the first six months of 2025, the group witnessed a decline of almost 10 per cent in deliveries to the US. Two of the luxury car brands under Volkswagen AG's umbrella, Porsche and Audi, are particularly exposed to US tariffs, given they have no production in the country, and rely heavily on exports.
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