Due to tariffs imposed by US President Donald Trump, Volkswagen reported losses of $1.5 billion in the first half of the year.
The German automaker’s revised full-year sales and profit margin projections were welcomed, according to the automaker.
Volkswagen, the largest car manufacturer in Europe, now anticipates operating profit margins of 4% to 5%, up from the previous projections of 5.5% to 6.5%. Sales for the full-year, which were previously reported to be 5% higher, are expected to be at the same level as those for the year prior.
After the company delayed assessing the damage caused by tariffs in the prior quarter , investors largely anticipated a guidance cut, and they appeared relieved by assurances that the group’s premium brands Audi and Porsche would recover after suffering significant losses in the second quarter.
In response to the tariffs, CEO Oliver Blume advised investors that the company should accelerate its cost-cutting efforts.
“We need to increase our expenditures and accelerate the implementation. We can’t assume that the tariff situation is temporary, Blume said.
Global car manufacturers have recorded billions of dollars in losses, and some have issued profit warnings as a result of US tariffs. China ’s fierce competition, as well as domestic laws intended to speed up the transition to electric vehicles, are also affecting the European industry.
Tariff imposed
This week, Volkswagen is the third automaker to report a profit-gain hit as a result of tariffs. General Motors, based in Michigan, reported that the second quarter’s tariffs cost the company $1.1 billion. For the first six months of 2025, Stellantis, a manufacturer of brands like Jeep and Fiat, reported a $2.7 billion loss.
VW and its rivals are pressuring European trade negotiators to agree to lower the US tariffs that VW has been facing since April.
As part of its efforts to avoid a threatened 30 percent levy starting August 1, EU diplomats have indicated that the bloc may be moving toward a broad 15 percent tariff. This week’s US-Japan agreement gave rise to hopes for a similar agreement in Europe, which increased carmakers’ shares.
Volkswagen’s profit margin, according to Arno Antlitz, will be roughly in the middle of its guidance with a 15 percent tariff-based deal in the style of Japan.
However, he did point out that a deal was in the air. Since we are already in July, he said, “The more we tend to follow the lower end of the guidance,” as the year progresses.
When asked how the company planned to protect its margins from tariffs, Antlitz declined to comment on price increases.
Volkswagen reported a $4.4 billion (3.8 billion euros) operating profit for the quarter that ended on June 30, a 29 percent decrease from the previous year. For the decline in sales of lower-margin all-electric models as well as the increase in restructuring costs, it cited tariffs and restructuring costs.
Volkswagen’s deliveries to the US decreased by almost 10% in the first six months of 2025, despite increasing global deliveries by 1.5 percent in the first six months.
The carmaker’s first-half global sales totaled 18.5 percent of its total sales in North America.
Volkswagen was among the laggards as the automaker’s struggling auto sector wasundergoing a major overhaul to cut more than 35, 000 jobs by the end of the decade, according to car sales data for June.
Porsche and Audi are particularly susceptible to US tariffs because they don’t produce anything there and rely heavily on exports.
Porsche’s operating results decreased by more than 90% to 154 million euros ($181 million) and Audi by 64 percent to 550 million euros ($647 million) in the second quarter.
We anticipate that from 2026 onward, both Audi and Porsche will experience positive momentum as we approach the bottom this year.
VW’s stock is rising despite the losses. It had increased by more than 3 percent since the market opened and by more than 12 percent over the previous five days of trading as of noon in New York (16:00 GMT).
Other automakers’ stocks are rising, as are their stocks, which have also been affected by tariffs. The stock is up 3.9 percent for the day. Only about 0.2% of GM’s increase is expected.
Source: Aljazeera
Leave a Reply