Volkswagen cuts steerage after $1.5 billion hit from U.S. tariffs

Germany’s Volkswagen on Friday lowered its full-year steerage and reported a pointy drop in second-quarter revenue, because the auto large navigates the disruptive influence of U.S. tariffs and restructuring prices.

Europe’s greatest carmaker posted working revenue of three.83 billion euros ($4.49 billion) for the three months via June, down 29% from 5.4 billion euros a 12 months in the past. Analysts had anticipated second-quarter revenue to come back in at 3.94 billion euros, in response to a Factset-compiled consensus.

Volkswagen reported second-quarter gross sales income of 80.8 billion euros, additionally lacking analyst expectations of 82.2 billion euros.

The automaker stated the influence of U.S. tariffs alone price the corporate 1.3 billion euros within the first six months of the 12 months. Restructuring provisions, in the meantime, amounted to 700 million euros over the identical interval.

Trying forward, Volkswagen stated its 2025 working return on gross sales is now anticipated to vary between 4% to five%, down from a earlier forecast of 5.5% to six.5%. Full-year gross sales are anticipated to come back consistent with the extent achieved as final 12 months, in comparison with an increase of as much as 5% beforehand.

The outcomes come as Europe’s automakers wrestle to familiarize yourself with a sequence of trade challenges, together with sturdy competitors from Chinese language automobile manufacturers and U.S. President Donald Trump‘s import tariffs of 25%.

The automotive sector is broadly considered acutely weak to U.S. tariffs, significantly given the excessive globalization of provide chains and the heavy reliance on manufacturing operations throughout North America.

“When you have a look at the primary half of the 12 months, you see principally a blended image,” Arno Antlitz, chief monetary officer at Volkswagen, advised CNBC’s “Squawk Field Europe” on Friday.

“Firstly, you see super success of our merchandise, each on the combustion engine facet and on the electrical automobile facet. In Europe, each fourth automobile comes from the Volkswagen Group, however as you stated, our numbers are considerably down,” he added.

Volkswagen’s CFO stated the agency’s ramp up of EVs weighed on margins, noting that margins for EVs are decrease in comparison with worldwide combustion engine (ICE) autos.

Apart from that, Antlitz stated one-offs such because the influence of U.S. tariffs and restructuring measures had a mixed price of about 2 billion euros.

Key earnings highlights:

• Volkswagen reported 80.8 million automobile gross sales within the three months via June, down 3% from the identical interval a 12 months in the past.
• Order consumption for autos in Western Europe rose by 19% within the first half of the 12 months.
• The corporate stated it expects a full-year funding ratio of between 12% to 13% in its automotive division.

Trump not too long ago threatened to lift duties on EU auto imports to 30% from Aug. 1, ramping up the strain on the 27-nation buying and selling bloc. The European Fee, the EU’s govt arm, has since been contemplating its response.

Volkswagen stated it’s assumed that U.S. import tariffs of 27.5% will proceed to use within the second half of the 12 months, noting there may be “excessive uncertainty” with regard to commerce coverage.

Shares of Volkswagen rose 3.9% on the day, reversing losses earlier within the buying and selling session.

“Sure, they struggled to maintain up within the export market, however at the least [the] dwelling market is doing effectively in the mean time. They’re ramping up EV gross sales. It is now hitting 11% on a worldwide degree of its complete gross sales — and in Europe it’s already rather more,” Luman advised CNBC’s “Europe Early Version” on Friday.

“They presumably may need benefitted from deteriorated Tesla gross sales however nonetheless it’s doing fairly effectively in the mean time in Europe,” he added.

Volkswagen reported first-half automobile gross sales progress of 19% in South America, 2% in Western Europe and 5% in Central and Jap Europe. The corporate stated this greater than made up for the anticipated declines of three% in China and — primarily attributable to tariffs — for a 16% dip in North America.

The corporate stated its order consumption for all-electric autos within the first half of 2025 rose by 62%.

— CNBC’s Jenni Reid contributed to this report.