Volkswagen Lowers Outlook as U.S. Tariffs Weigh on Profit

Volkswagen has revised down its full-year guidance after reporting a steep decline in second-quarter earnings, reflecting the growing impact of U.S. import tariffs and industry headwinds.

The German automaker posted an operating profit of €3.83 billion ($4.49 billion) for the quarter ending in June, representing a 29% drop compared to €5.4 billion in the same period last year. Revenue also fell short of internal targets, coming in at €80.8 billion.

In a long-anticipated update on the impact of U.S. trade measures, Volkswagen announced that it now expects its 2025 operating return on sales to range between 4% and 5%, down from its earlier forecast of 5.5% to 6.5%. The company also adjusted its full-year sales forecast, projecting results to be flat compared to last year, instead of the previously expected increase of up to 5%.

The results highlight the pressure European automakers face as they contend with new U.S. tariffs, intensifying competition from Chinese brands, and broader structural changes in the auto industry. A planned increase in U.S. duties on EU car imports to 30% starting August 1 is expected to strain cross-border operations further.

Volkswagen’s chief financial officer noted that, while the group achieved strong product milestones and made progress in corporate restructuring, profitability suffered a setback due to a combination of factors. These include an increase in sales of lower-margin electric vehicles, higher U.S. import duties, and internal restructuring costs.

The company emphasized that the automotive sector remains highly exposed to trade disruptions, given the complexity of global supply chains and the strategic importance of its manufacturing footprint in North America.

Volkswagen said it is operating under the assumption that 27.5% U.S. tariffs will remain in place through the second half of the year and acknowledged a high degree of uncertainty surrounding future trade policy developments.