Volkswagen has cut its 2025 profit and sales forecasts after taking a €1.3 billion ($1.5 billion) hit from U.S. tariffs in the first half of the year, citing growing pressure on its global operations.
Financial Impact
Q2 operating profit dropped 29% to €3.8 billion, hit by tariffs, restructuring costs, and rising sales of lower-margin electric vehicles.
The group now expects its full-year operating margin to fall between 4% and 5%, down from its previous forecast of 5.5% to 6.5%.
Annual sales are now projected to remain flat, reversing earlier guidance of up to 5% growth.
U.S. Market Pressure
The U.S. accounts for nearly one-fifth of VW’s global sales, but deliveries there fell almost 10% in the second quarter.
Volkswagen is lobbying for a U.S.-EU trade deal to reduce tariffs from the current 25% to 15%, similar to recent U.S.-Japan terms.
Strategic Response
The automaker is accelerating cost-cutting efforts, including a plan to reduce over 35,000 jobs by 2030.
It is also expanding its U.S. footprint, investing in domestic production and considering building Audi vehicles in the U.S. to bypass tariffs.
Recent investments include a $2 billion Scout EV plant in South Carolina and over $5 billion in EV startup Rivian.
Executive Comments
CEO Oliver Blume said the company is preparing for a prolonged tariff regime, while CFO Arno Antlitz warned that a delay in trade negotiations could push results toward the lower end of guidance.
Volkswagen’s outlook now hinges heavily on upcoming trade talks between the EU and the U.S., with a potential breakthrough expected by August 1.