Volkswagen slashed its 2025 sales and profit forecasts on Friday after reporting a €1.3 billion ($1.5 billion) first-half impact from U.S. import tariffs, marking its first public assessment of the financial toll from trade tensions triggered by President Donald Trump’s policies.
Europe’s largest automaker now expects an operating profit margin of 4% to 5% for the full year, down from a previous projection of 5.5% to 6.5%. The company also revised its revenue outlook, stating that full-year sales would remain flat compared to 2024, having earlier guided for growth of up to 5%.
Volkswagen shares fell as much as 4.6% in early trading but later recovered to trade 1% higher by 1305 GMT. The downward revision had been widely anticipated after the carmaker deferred its tariff assessment in the previous quarter.
Global automakers have been grappling with the financial impact of tariffs, heightened competition from Chinese rivals, and tightening domestic regulations related to the shift toward electric vehicles. Volkswagen reported an operating profit of €3.8 billion in the second quarter, a 29% decline year-on-year, citing higher sales of lower-margin electric models, restructuring costs, and tariffs.
CEO Oliver Blume told investors the company must accelerate cost-cutting measures to remain competitive. “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.
Volkswagen is among several automakers urging European Union officials to negotiate a reduction in the 25% tariff on U.S.-bound vehicles that has been in place since April. EU diplomats have signaled a possible shift toward a broader 15% tariff as negotiations continue to avoid a further increase to 30% slated for August 1. A recent trade deal between the United States and Japan raised hopes for a similar agreement with Europe.
Chief Financial Officer Arno Antlitz said a Japan-style deal could help Volkswagen land in the mid-range of its profit guidance. “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,” Antlitz warned. He declined to comment on potential price hikes as a strategy to preserve margins.
In the first half of 2025, Volkswagen increased global vehicle deliveries by 1.5%, though U.S. deliveries fell nearly 10%. North America accounted for 18.5% of the group’s total sales revenue during the period.
Luxury brands Porsche and Audi were particularly affected by the tariffs due to their reliance on exports and lack of local production in the United States. Porsche’s operating profit plunged over 90% to €154 million in the second quarter, while Audi’s fell 64% to €550 million.
“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.