Volkswagen Reports 29% Q2 Profit Drop, Cuts Full-Year Outlook Amid Tariffs

Volkswagen Group reported a 29% decline in second-quarter operating profit to €3.83 billion, missing analyst expectations amid challenges including increased U.S. import tariffs, weak performance from premium brands Porsche and Audi, and higher sales of lower-margin electric vehicles. The U.S. tariffs, imposed by President Donald Trump to boost domestic industry, have cost Volkswagen €1.3 billion in the first half of 2025, with restructuring expenses adding another €700 million. As a result, Volkswagen has lowered its full-year operating margin forecast to between 4% and 5%, down from an earlier prediction of 5.5% to 6.5%, and now expects flat sales compared to previous growth estimates. Despite these setbacks, Volkswagen is seeing growing momentum in electric vehicle orders, particularly in Europe where EVs represent 11% of total sales, pointing to long-term opportunities amid its ongoing electrification strategy. The company also faces competitive pressures from China and ongoing global supply chain issues, while the tariff-driven cost challenges could tighten inventories and delay product launches for U.S. dealers. Volkswagen remains Europe's largest carmaker by volume but must navigate these multiple headwinds to maintain its market position.