Volkswagen earnings decrease, forecasted profits also drop, causing point of contention for shares
Volkswagen Suffers Q2 Profit Drop Amidst US Tariffs and Electric Vehicle Transition
Volkswagen AG, the German automotive giant, has reported a significant drop in profits for the second quarter of 2025. The company's stock is under pressure in early trading, down around 2% to 93.48 euros on the Tradegate trading platform.
The decline in profits is primarily attributed to rising costs from US tariffs and lower margins on electric vehicle (EV) sales. Operating profits fell 29% year-on-year to €3.83 billion, and earnings after tax declined by about 36.3% to €2.29 billion. Revenues also decreased by 3% to €80.8 billion, both below market forecasts.
The firm cited US tariffs of 25% (with a potential increase to 30%) and high tariff-related expenses totaling roughly €2 billion as major cost drivers. Additionally, expanding EV sales negatively impacted profitability since EVs have slimmer margins compared to internal combustion engine vehicles. Restructuring costs, including those linked to Audi’s realignment, further pressured results.
As a result, Volkswagen has lowered its full-year operating return on sales guidance to around 4%-5%, down from a previous forecast of 5.5%-6.5%. This indicates an expectation of continued pressure on profitability through the remainder of the year, largely due to persistent high US tariffs and the ongoing costly transition to electric vehicles.
CEO Oliver Blume expects revenue to remain at the previous year's level, citing restructuring costs at Audi, Porsche, and VW, as well as the persistently low margin in the electric segment. If the US tariff rate is reduced to 10%, the upper end of the forecast could be reached, according to VW.
Volkswagen's stock will start trading on Friday with a significant loss. Among German automakers, DER AKTIONÄR currently favours BMW. Porsche AG is seen as having the greatest comeback potential.
The operating result decreased by over 29% to 3.83 billion euros, and the operating return on sales fell to 4.7%. High restructuring costs and the current strong but margin-weak sales of electric vehicles also contributed to the profit drop.
The group expects further headwinds for the current year due to increased US tariffs and the continued weakness of margin-rich brands. Positive news from the trade conflict could provide positive impulses for the entire sector. The 50-day line, currently around 92.14 euros, is a technically important level for Volkswagen's stock.
Despite the challenges, Volkswagen continues to focus on its transformation from a "turnaround case" to an innovation leader. The company's vehicle deliveries increased slightly (about 1.3% year-on-year in H1 2025), demonstrating its ongoing commitment to growth.
References: [1] Reuters. (2025, July 23). Volkswagen lowers full-year profit and revenue expectations. Retrieved from https://www.reuters.com/business/autos-transportation/volkswagen-lowers-full-year-profit-and-revenue-expectations-2025-07-23/
[2] Automotive News Europe. (2025, July 23). Volkswagen lowers full-year profit and revenue expectations. Retrieved from https://europe.autonews.com/business/volkswagen-lowers-full-year-profit-and-revenue-expectations
[3] Financial Times. (2025, July 23). Volkswagen lowers full-year profit and revenue expectations. Retrieved from https://www.ft.com/content/723e06c4-c74a-488c-a0a3-4d6b550834c8
[4] Bloomberg. (2025, July 23). Volkswagen lowers full-year profit and revenue expectations. Retrieved from https://www.bloomberg.com/news/articles/2025-07-23/volkswagen-lowers-full-year-profit-and-revenue-expectations
- The decline in Volkswagen's profits is affecting various sectors of the industry, with finance experts expressing concerns about its impact on the automotive business.
- The finance industry is closely monitoring the situation, as the profit drop at Volkswagen could potentially affect transportation companies that rely on cars manufactured by the automotive giant.
- Volkswagen's profit drop in Q2 2025, due to US tariffs and the shift to electric vehicles, may also have implications for other companies in the finance sector that invest heavily in the automotive industry.
