Volkswagen’s earnings fell 40% in the first quarter, as higher manufacturing costs dropped to profit margins, and U.S. tariffs cast a shadow.
The company said on Wednesday that pre-tax revenue was 3.1 billion euros, down from 5.1 billion euros a year ago, until the three months in March. Group operating margin fell from 6% to 3.7%.
Volkswagen’s profitability is declining as it faces rising costs and growing capacity at its European factories and weak demand in China, a key market. Meanwhile, there is uneven purchase of electric vehicles in Europe and the United States, and President Donald Trump’s tariffs are threatening to further damage profits.
While Volkswagen’s outlook for 2025 remains unchanged, it said its forecast sales growth of up to 5% does not take into account the impact of U.S. tariffs. However, the company said it now expects its target range of 5.5% to 6.5% yields.
European automakers have been working to assess the full impact of U.S. tariffs as the Trump administration continues to change its position through warnings, exemptions and delays. Recently, Trump signed a directive on Tuesday to take on some of the responsibilities of foreign parts and prevent multiple taxes from stacking on each other. The move could reduce total tariffs on Volkswagen models in Chattanooga, Tennessee and Puebla, Mexico, as well as Audi and Porsche vehicles shipped from Europe.
Volkswagen’s luxury sports car brand Porsche AG cut its profit outlook this week, citing weaker sales of electric taxes and electric vehicles. However, uncertainty surrounding the tariffs have led to other automakers, including Mercedes-Benz Group, Volvo Cars and General Motors, to completely abolish their forecasts.
Volkswagen pre-releases its quarterly earnings earlier this month, noting that special items with operating profits have been hit by about 1.1 billion euros. The allegations of around €300 million are attributed to diesel issues and are attributed to the impact on cars delivered in March.
The German company said on Wednesday that demand for new models in Europe was very strong, with order backlogs rising to nearly 1 million units in the first quarter.
This article was generated from the Automation News Agency feed without the text being modified.
