Shares in the German carmarker fell after it reported a significant decline in operating profit, with ongoing tariffs and restructuring costs playing a key role.
Volkswagen posted disappointing earnings results, reporting a 29% year-over-year drop in second quarter sales. The German car manufacturer cited a “challenging environment” as it published a $1.5 billion first-half hit from tariffs.
The company also cut its full-year sales and profit margin forecasts as it responds to tariff-related difficulties. The industry has faced strict import restrictions as a result of the ongoing global trade war. Total vehicle sales fell from 100,600 between April and June 2024 to just over 71,000 for the same period in 2025.
Following the news, shares in Volkswagen dropped 4.6% at the early opening on Friday, before recovering slightly later on. The firm is not alone in experiencing a tough year. On Monday, the Vauxhall maker, Stellantis, said tariffs had already cost it $305 million, with Volvo expressing similar sentiment.
Several leading automakers have faced losses totalling billions of dollars, with some issuing profit warnings due to US import tariffs. Europe’s car industry is facing increased competition from China, alongside domestic regulations aimed at encouraging the transition to electric-vehicles (EV).
Volkswagen cuts profit margin range for 2025
Europe’s largest vehicle producer has downgraded its operating profit forecast for the year. The company now expects a margin of between 4% and 5%, compared with an earlier 5.5-6.5% range. Full-year sales, previously expected to rise by up to 5%, have been revised down to be level with 2024 figures.
Despite being able to increase global deliveries by 1.5% in the first six months of 2025, Volkswagen saw a decline of almost 10% in deliveries to the US. North America sales revenue made up 18.5% of the carmaker’s worldwide sales in the first-half of the year.
Over in Europe, June’s car sales data indicated a broader slowdown in the region’s struggling auto sector. It highlighted Volkswagen as being among the weakest performers, with the company planning to cut 35,000 jobs by the end of the decade.
European Union close to agreeing US tariff deal
According to some reports, the European Union (EU) appears close to a new trade agreement with the US. If implemented, this would place 15% tariffs on most imports from the bloc, with no special exemption for the automotive industry.
Officials are currently working on the deal, with the aim of reaching an agreement before Donald Trump’s 1 August deadline. If agreed, it would mean the EU gets a worse deal than the UK, which has agreed a 10% baseline tariff.
Even with the tariff cut from 27.5%, the new rate would remain more than five times the 2.75% duty German carmakers faced before Trump’s return to the White House.
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