Roundup: Audi profit slumps as U.S. tariffs squeeze German auto giants

The Star

28-07-2025

BERLIN, July 28 (Xinhua) -- German premium carmaker Audi announced on Monday that its net profit plummeted by 37.5 percent year-on-year in the first half of 2025.
According to its latest financial report, Audi's net profit fell to 1.35 billion euros (1.57 billion U.S. dollars). The company primarily attributed the sharp decline to significantly higher costs stemming from U.S. auto tariffs that came into effect in early April.
Juergen Rittersberger, Audi's Chief Financial Officer, revealed that the tariffs alone have added around 600 million euros in extra expenses. Since Audi does not operate a manufacturing plant in the United States, it has had to shoulder the full burden of the tariffs, rather than passing the cost on to consumers.
Rittersberger also pointed to restructuring costs as another major factor behind the weakened performance. As Germany's auto sector undergoes a significant transition toward electric mobility, Audi reported a 5.9 percent decline in global vehicle deliveries during the first half of the year. However, there was a bright spot: deliveries of battery electric vehicles surged by 32.3 percent in the same period.
To navigate this difficult terrain, Audi has embarked on what it describes as the largest transformation in its history, aiming to cut annual costs by 1 billion euros over the medium term. As part of this effort, the company plans to reduce its German workforce by approximately 7,500 jobs by the end of 2029.
A central pillar of Audi's forward-looking strategy is a renewed focus on the Chinese market, where it sees substantial growth potential. Rittersberger confirmed plans to launch several new models in China in the coming months, including the Q6L e-tron and A5L, with hopes of reinvigorating momentum in the second half of 2025.
Audi's challenges underscore the broader headwinds facing Germany's export-oriented automotive sector, which has been rocked by escalating trade tensions. As one of the world's largest auto exporters, Germany has been particularly vulnerable since Washington implemented an additional 25 percent tariff on European Union (EU)-manufactured vehicles.
Data from the Federal Statistical Office shows that German car exports to the United States slumped by 23.5 percent year-on-year in April and May, despite a 14.7 percent surge in the first quarter. The early-year boost was largely due to front-loaded orders from American buyers rushing to avoid the anticipated tariff hike.
The United States remains Germany's largest automotive trading partner. Last year, the country's top three automakers - Volkswagen, Mercedes-Benz, and BMW - accounted for around 73 percent of all EU car exports to the U.S.
Volkswagen Group, which owns Audi, reported a 33 percent drop in operating profit for the first half of 2025, citing approximately 1.3 billion euros in additional tariff-related costs. On Friday, the group revised its full-year operating return on sales forecast down to 4 to 5 percent, compared to an earlier projection of 5.5 to 6.5 percent. The revised outlook is based on the assumption that U.S. tariffs in the second half of the year will range between 10 and 27.5 percent.
Porsche, another high-end Volkswagen subsidiary, is also under pressure. The luxury brand announced last week that it is weighing further cost-cutting measures in response to declining U.S. sales and escalating costs. The company estimates it incurred around 300 million euros in extra expenses in April and May due to efforts to shield customers from the impact of new duties.
While a weekend agreement between the United States and the European Union capped auto tariffs at 15 percent, a reduction from previously planned punitive levels, the German auto industry remains cautious.
Hildegard Mueller, president of the German Association of the Automotive Industry (VDA), warned on Monday that the revised tariff rate could still cost German carmakers several billion euros annually, exacerbating financial strain at a time of fundamental transformation for the industry.
The VDA has consistently opposed Washington's tariff hikes, warning they would undermine EU exports, disrupt global supply chains, and increase costs for American consumers. (1 euro = 1.17 U.S. dollars)