German Auto Giant Volkswagen (VOW3) Reports $1.5 Billion Hit from U.S. Tariffs
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The impact of tariffs led to a sharp drop in Volkswagen's second-quarter profit and prompted the automaker to lower its full-year guidance. Europe's largest car manufacturer posted an operating profit of 3.83 billion euros (US$4.49 billion) for the three months ended June 30, down 29% from 5.4 billion euros a year ago. Analysts had expected a second-quarter profit of 3.94 billion euros.
Volkswagen reported second-quarter sales revenue of 80.8 billion euros, also missing analyst expectations of 82.2 billion euros. Management blamed the impact of U.S. tariffs for the poor results, highlighting that U.S. import duties cost the company 1.3 billion euros (US$1.5 billion) in the first six months of 2025.
Dark Outlook
In terms of guidance, Volkswagen said its 2025 operating return on sales is now expected to range between 4% and 5%, down from a previous forecast of 5.5% to 6.5%. Full-year sales are expected to come in line with the level achieved in 2024, compared to a rise of 5% previously.
The results come as Europe's automakers struggle with numerous challenges, including rising competition from cheaper Chinese car brands and U.S. President Donald Trump's import duties of 25% on all foreign automobiles.
The auto sector is especially vulnerable to U.S. tariffs because of its globalized supply chains and heavy reliance on manufacturing operations outside of America.
Is VOW3 Stock a Buy?
The stock of Volkswagen has a consensus Moderate Buy rating among nine Wall Street analysts. That rating is based on four Buy and five Hold recommendations issued in the last three months. The average VOW3 price target of €115.20 implies 15% upside from current levels.
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