Volkswagen Faces Profit Decline Amid Tariffs, Emission Costs

Volkswagen's first-quarter operating profit dropped by 40% to €2.8 billion, significantly below market expectations, primarily due to provisions for potential fines related to EU carbon emissions targets, restructuring costs for its software unit Cariad, and the impact of 25% US tariffs on vehicles made in Mexico for the US market. Volkswagen allocated €600 million for potential fines and €200 million for restructuring. Despite a slight increase in total revenue to €78 billion, these factors have led to a challenging start for VW, though the European Commission's proposal to ease emission standards and a temporary tariff pause offer some relief. Volkswagen maintains its full-year sales growth outlook of up to 5%, excluding potential further impacts from tariffs. The situation underscores the broader challenges faced by the automotive industry amid regulatory and geopolitical pressures.