Automakers will join Stellantis and GM to report profit hits as tariffs reduce industry costs.
Volkswagen reported a loss of $1.5 billion in the first half of the year due to tariffs imposed by President Donald Trump.
The German automaker reported a hit as the company revised its full-year sales and profit margin forecasts.
Volkswagen, Europe’s largest automaker, expects its operating profit margin to be between 4-5% this year, but its previous forecast is between 5.5% and 6.5%. Full-year sales, which previously appeared to be up to 5% higher, are expected to be equal in the previous year.
Investors appeared to be convinced that the group’s luxury brands and Porsche would recover next year after the company slashed its guidance and severe losses in the second quarter.
CEO Oliver Blume told investors the company must accelerate its cost-cutting efforts in response to tariffs.
“We need to shift our cost efforts to high gear and accelerate implementation. After all, we cannot assume that the tariff situation is temporary,” Blume said.
Global automakers have booked billions of dollars in losses, some have issued profit warnings due to US tariffs. European industries are also facing rigid competition with China and domestic regulations aimed at speeding up the transition of electric vehicles.
Tariff strike
Volkswagen is the third automaker to report a hit on their profits this week due to tariffs. Michigan-based General Motors reported that tariffs would cost $1.1 billion in the second quarter. Stellantis, the manufacturer of brands that include Jeep and Fiat, reported a loss of $2.7 billion for the first six months of 2025.
VW and its competitors are pushing European trade negotiators to sign contracts to reduce the 25% US tariffs they have faced since April.
EU diplomats are trying to avoid the threatened 30% collection since August 1, indicating that the bloc may be heading for a wide 15% tariff. The deal struck between the US and Japan this week, hoping for a similar European agreement, boosting the automaker’s stocks.
VW Finance chief Arno Antlitz said Volkswagen’s profit margins will land in the middle of guidance in a Japanese-style deal that has a tariff rate of 15%.
However, he warned that the watch was ticking at the time of finding a deal. “We’re already in July, so the longer we go into the second half of the year, the more we tend to be at the bottom edge of guidance,” he said.
Antlitz declined to comment on the price increase on how investors planned the company’s plans to protect margins from tariffs.
Volkswagen reported operating profit of $4.4 billion (EUR 3.8 billion) for the quarter ended June 30th. It cited increased sales of tariffs and restructuring costs for the decline, as well as lower margins of all electricity models.
Volkswagen was able to increase delivery worldwide by 1.5% in the first six months of 2025, but the group fell almost 10% in deliveries to the US.
Sales revenue in North America accounted for 18.5% of the automaker’s global sales in the first half.
Car sales data in June highlighted a broader slowdown in Europe’s struggling auto sector. And it showed Volkswagen among Laguards as the company undergoes a massive overhaul to cut more than 35,000 jobs by the end of the decade.
Porsche and Audi are especially exposed to US tariffs given their lack of production there and are heavily dependent on exports.
In the second quarter, Porsche’s operating results rose by more than 90% to 154 million euros ($181 million), while Audi plunged from 64% to 550 million euros ($647 million).
“We hope that both Audi and Porsche companies will be able to touch the bottom of this year with positive momentum from 2026 onwards,” Blume says.
Despite the losses, VW shares are rising. At midday in New York (16:00 GMT), it has grown more than 3% since the market opened, and has risen by more than 12% in trading over the past five days.
Stocks of other automakers, which also reported a tariff hit, are on the upside. Stellantis is up 3.9% that day. GM only increases by about 0.2%.
