Volkswagen Lowers 2025 Outlook as Tariffs Weigh on Profits
On Friday, Volkswagen issued its first detailed projection of how U.S. President Donald Trump’s trade dispute with Europe could affect its earnings by 2025, following a sharp drop in second-quarter operating profit attributed to tariffs.
Europe’s largest automaker now expects its operating return on sales to fall within the 4% to 5% range—down from its earlier forecast of 5.5% to 6.5%—marking a significant revision tied to the escalating trade conflict.
The company also trimmed its full-year sales outlook, now anticipating flat results compared to last year, rather than the previously projected increase of up to 5%.
Volkswagen (ETR: VOWG_p), along with other automakers, is urging European trade officials to negotiate an alternative to the 25% U.S. import tariff on European vehicles, which has been in place since April.
For the quarter ending June 30, Volkswagen reported operating profit of €3.8 billion ($4.46 billion), representing a 29% year-over-year decline. The drop was attributed to the combined impact of U.S. tariffs, ongoing restructuring expenses, and increased sales of lower-margin electric vehicles.
Recent June car sales figures have highlighted a broader slowdown in Europe’s already challenged auto sector. Volkswagen was among the weaker performers, as it continues a massive transformation plan that includes cutting more than 35,000 jobs by the end of the decade.
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