Volkswagen profits tumble as tariffs weigh on auto industry
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.
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