Auto giant Volkswagen cuts guidance as U.S. tariffs hit prof…

Germany’s Volkswagen on Friday lowered its full-year guidance and reported a sharp drop in second-quarter profit, as the auto giant navigates the disruptive impact of U.S. tariffs.

Europe’s biggest carmaker posted operating profit of 3.83 billion euros ($4.49 billion) for the three months through June, down 29% from 5.4 billion euros a year ago.

Analysts had expected second-quarter profit to come in at 3.94 billion euros, according to a Factset-compiled consensus.

Volkswagen reported second-quarter sales revenue of 80.8 billion euros, also missing analyst expectations of 82.2 billion euros.

In a long awaited assessmnet of the impact of U.S. tariffs, Volkswagen said its 2025 operating return on sales is now expected to range between 4% to 5%, down from a previous forecast of 5.5% to 6.5%.

Full-year sales are now also expected to come in line with the level achieved as last year, compared to a rise of up to 5% previously.

The results come as Europe’s automakers struggle to get to grips with a series of industry challenges, including robust competition from Chinese car brands and U.S. President Donald Trump’s import tariffs of 25%.

“Our half-year figures present a contrasting picture: on the one hand, we achieved strong product success and made progress in realigning the company,” Arno Antlitz, chief financial officer at Volkswagen, said in a statement.

“On the other, the operating result declined by a third year-on-year – also due to higher sales of lower-margin all-electric models. In addition, increased US import tariffs and restructuring measures had a negative impact,” he said.

Key earnings highlights:

• Volkswagen reported 80.8 million vehicle sales in the three months through June, down 3% from the same period a year ago.
• Order intake for vehicles in Western Europe rose by 19% in the first half of the year.
• The company said it expects a full-year investment ratio of between 12% to 13% in its automotive division.

The automotive sector is widely regarded as acutely vulnerable to U.S. tariffs, particularly given the high globalization of supply chains and the heavy reliance on manufacturing operations across North America.

Trump recently threatened to raise duties on EU auto imports to 30% from Aug. 1, ramping up the pressure on the 27-nation trading bloc. The European Commission, the EU’s executive arm, has since been considering its response.

Volkswagen said it is assumed that U.S. import tariffs of 27.5% will continue to apply in the second half of the year, noting there is “high uncertainty” with regard to trade policy.

Rico Luman, senior sector economist for transport and logistics at Dutch bank ING, said it was encouraging to see that Volkswagen had been able to ramp up its electric car sales “quite significantly,” particularly in its home market of Europe.

“They possibly might have benefitted from deteriorated Tesla sales but still it is doing quite well at the moment in Europe,” he added.

Volkswagen reported first-half vehicle sales growth of 19% in South America, 2% in Western Europe and 5% in Central and Eastern Europe. The company said this more than made up for the expected declines of 3% in China and — primarily due to tariffs — for a 16% dip in North America.

The company said its order intake for all-electric vehicles in the first half of 2025 rose by 62%.