Tariffs slash VW profits by €1.3 billion
Volkswagen reported a €1.3 billion hit to first-half profits as a result of U.S. import tariffs, and lowered its full-year guidance for both sales growth and operating profit margins. The German automaker posted second-quarter operating profit of €3.83 billion, down 29 percent from €5.4 billion a year earlier and below analysts’ forecasts. Sales revenue stood at €80.8 billion, also missing expectations. Restructuring provisions added a further €700 million in costs over the same period.
The impact of a 25 percent U.S. duty on European car imports was quantified at €1.3 billion in the first half. As a result, Volkswagen now expects an operating profit margin of 4 to 5 percent for the full year, down from its previous 5.5 to 6.5 percent target. Full-year sales are now forecast to remain at roughly last year’s level, rather than increasing by up to 5 percent as originally projected.
U.S. tariffs have compounded other industry pressures, including intensified competition from Chinese brands and domestic regulations promoting electric vehicles (EVs). Volkswagen’s ramp-up of EV production, while successful in boosting vehicle intake—order volumes for all-electric models rose 62 percent in the first half—continues to weigh on margins, as EV returns remain lower than those for combustion-engine models.
Regional performance varied: first-half vehicle deliveries grew 19 percent in South America, 5 percent in Central and Eastern Europe, and 2 percent in Western Europe, offsetting a 3 percent decline in China and a 16 percent slide in North America, the latter largely attributed to tariffs. Order intake in Western Europe rose 19 percent.
