Volkswagen's profits experience a noticeable decline during the second quarter of 2025
Volkswagen Group Faces Significant Profit Impact from US Import Tariffs
In the first half of 2025, Volkswagen Group, a leading automaker, has been grappling with the impact of US import tariffs totaling 27.5%. This figure includes a recently imposed 25% auto tariff on top of a preexisting 2.5% tariff.
The tariffs have had a significant negative impact on the company's profits. Volkswagen reported a €1.3 billion (approximately US$1.5 billion) profit hit directly attributable to these US tariffs [2][3]. As a result, the Group’s operating profit for H1 2025 was €6.7 billion (US$7.9 billion), down 33% year-on-year [2].
Despite this setback, the company remains optimistic. CFO Arno Antlitz explains that the result shows they are on the right track, but emphasizes the importance of money coming into the cash register [1]. He also notes high uncertainty about further tariff developments and their ongoing effects.
In a worst-case scenario, the current high tariffs (27.5%) might persist through the second half of 2025, potentially continuing to dent profits. However, a best-case outcome could see tariffs reduced to 10% following ongoing negotiations between the US and the European Union, which might alleviate some financial pressure on Volkswagen [1].
The company's performance in other areas has been encouraging. Orders for fully electric vehicles have increased particularly strongly by 62 percent. Volkswagen has maintained its sales figures in a globally challenging market environment. The new models of all drive types, including electric cars like VW ID.7 Tourer, ŠKODA Enyaq, and Audi Q6 e-tron, are driving the order growth.
Volkswagen has further expanded its leading position in electromobility in Europe, with a 28% market share. The company's order intake in Western Europe shows a clear increase compared to the previous year.
CEO Oliver Blume remains optimistic about the company's performance despite the challenging environment. He is optimistic about the continuation of the positive trend in the second half of the year. However, he also acknowledges further challenges from political uncertainty, increasing trade restrictions, geopolitical tensions, increasing competitive intensity, volatile commodity, energy, and foreign exchange markets, and tightened emission-related requirements.
In response to these challenges, the company plans to resolutely implement and, if necessary, accelerate ongoing programs to improve results. The result in the second quarter is almost seven percent at the upper end of the company's own expectations. Despite expectations of revenue being at last year's level instead of increasing by up to 5%, the post-tax profits decreased by 36.3% in the second quarter of 2025, amounting to 2.29 billion euros.
References: [1] Reuters (2025). Volkswagen Group's Q2 profit falls 36.3% on US tariff costs, uncertainty. [online] Available at: https://www.reuters.com/business/autos-transportation/volkswagen-group-q2-profit-falls-36-3-us-tariff-costs-uncertainty-2025-08-04/ [2] Automotive News Europe (2025). Volkswagen Group reports €1.3 billion hit from US tariffs. [online] Available at: https://www.autonewseurope.com/article/9107502/volkswagen-group-reports-13-billion-hit-from-us-tariffs/ [3] Financial Times (2025). Volkswagen hit by $1.5bn US tariff costs in first half. [online] Available at: https://www.ft.com/content/15c6343c-6b70-473d-9e9a-8a02e945ff2a
- With ongoing US import tariffs on vehicles at 27.5%, the automotive industry, within which Volkswagen Group operates, faces potential financial pressure, especially considering the negative impact on the company's profits, as demonstrated by a €1.3 billion (approximately US$1.5 billion) profit hit reported by Volkswagen in the first half of 2025 [2][3].
- Should negotiations between the US and the European Union lead to a reduction in tariffs for the automotive industry, it might result in some alleviation of financial pressure on companies like Volkswagen Group, preventing a continuous dent in profits as currently forecasted in a worst-case scenario [1].
