• Volkswagen posted a loss of €1.3 billion in the first half of 2025.
Volkswagen posted a loss of €1.3 billion in the first half of 2025. The company announced the loss, mainly due to tariffs imposed by the U.S., on Tuesday. This is the first public estimate of the consequences of the Trump administration's trade war against foreign automakers. Like many global manufacturers, Volkswagen is suffering from increased U.S. tariffs, increased Chinese competition, and European regulations accelerating the transition to electric vehicles.
Forecasts have been revised downward
The German manufacturer lowered its operating profit margin forecast for 2025 to between 4 and 5 percent, down from an initial range of 5.5 to 6.5 percent. Sales, initially expected to grow by 5 percent, are now expected to remain stable compared to 2024. On Friday, when the markets opened, Volkswagen shares initially fell 4.6 percent, but then rebounded and closed the morning up 2.5 percent, as investors had anticipated this downward revision.
Managing a difficult tariff response
Faced with these economic pressures, CEO Oliver Blume emphasized the importance of accelerating cost-cutting measures: "We must intensify and accelerate our cost-cutting efforts. We cannot assume that the tariff situation is temporary." Volkswagen, along with other manufacturers, is calling for a reduction in the 25% tariff that has been in place since April. Discussions are underway between European and U.S. negotiators in hopes of reducing the tariff to 15%, similar to the recent agreement between the U.S. and Japan.
Arno Antlitz, the group's chief financial officer, said operating profit depends on the outcome of these negotiations. "The further we go into the second half of the year, the closer we get to the lower end of the forecast range."
Despite an increase in deliveries, results are down
For the second quarter ending June 30, Volkswagen reported an operating profit of €3.8 billion (approximately $6.4 billion CAD), which is a 29 percent decrease from last year. The decline was due to tariffs, restructuring costs, and an increase in sales of all-electric models, which are generally less profitable.
Despite an overall increase in deliveries of 1.5 percent during the first six months of the year, deliveries to the United States fell by nearly 10 percent. The United States accounted for 18.5 percent of the manufacturer's total revenue during this period.
An uncertain future for luxury brands
The group's luxury brands, notably Audi and Porsche, have been hit hard by tariffs because they don't produce anything in the US and rely heavily on exports. Meanwhile, Volkswagen is implementing a restructuring plan that will eliminate more than 35,000 jobs by the end of the decade, amid a slow recovery in the European market.
Due to persistent tariff pressure, declining margins, and increased competition, Volkswagen is experiencing a challenging period. The group is counting on new trade agreements and cost rationalization to mitigate the effects of these changes, but the second half of 2025 will be challenging if a compromise with Washington is not reached.