Volkswagen revealed on Friday that tariffs imposed by U.S. President Donald Trump have resulted in a financial loss of €1.3 billion ($1.5 billion) for the company in the first half of the year, contributing to a decline in overall profits.
The company has since revised its operating profit margin forecast for the year to between 4% and 5%, down from the earlier estimate of 5.5% to 6.5%. It now expects full-year sales to remain flat, rather than achieving the previously projected growth of up to 5%.
Volkswagen is the newest addition to the growing list of top automakers reporting multi-billion-dollar losses due to tariffs.
The brand reported a 38.5% year-over-year decline in net profit for the period, with earnings falling to €4.48 billion. The company attributed the downturn to a combination of factors, including a sharp rise in sales of lower-margin electric vehicles, restructuring costs, and the impact of tariffs.
The automaker is currently subject to a total tariff rate of 27.5%, comprising the 25% auto tariff and a preexisting 2.5% duty on vehicles.
“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,” said Volkswagen Group CEO Oliver Blume.
Volkswagen’s progressive brand group featuring Audi, Lamborghini, and Bentley saw its profits cut in half during the first half of the year. Meanwhile, the sports luxury division, dominated by Porsche, experienced an even steeper decline, with earnings plunging by over two-thirds. This sharp drop followed an 11% fall in Porsche sales, which totaled approximately 135,000 vehicles.
German car exports to the United States dropped significantly in April and May as import tariffs introduced by Trump began to affect automakers’ performance in the U.S. market, according to the VDA, Germany’s automotive industry association.
The VDA reported that vehicle exports to the U.S. declined by 13% in April and 25% in May compared to the same months in the previous year, with a total of 64,300 units shipped during the two-month period. Prior to Trump’s return to office, U.S. import duties on European vehicles stood at 2.5%, while the European Union imposed a 10% tariff on cars coming from the U.S.
GENERAL | Hyundai UK Trims EV Prices Beyond Government’s EV Grant Coverage
