Volkswagen cuts 2025 sales forecast after $1.5bn tariff blow

Volkswagen has cut its 2025 profit and sales forecast after losing $1.5 billion due to U.S. tariffs in the first half of the year. Tariffs are extra taxes placed on goods that are traded between countries. In this case, the U.S. is charging carmakers like Volkswagen more to bring cars into the country. This makes it more expensive to sell cars in America and eats into profits.

The company said its new expected profit margin will fall between 4% and 5%, a sharp drop from its earlier guidance of 5.5% to 6.5%. It no longer expects its full-year sales to grow and now says they will remain flat. This comes after its second-quarter profit fell 29% to €3.8 billion.

CEO Oliver Blume told investors the company must act fast. “We need to shift our cost efforts into high gear,” he said. “We cannot assume these tariffs will go away soon.” Volkswagen plans to speed up job cuts and cost-saving measures as a result.

Volkswagen’s luxury brands were hit the hardest. Porsche’s Q2 profit fell by over 90%, while Audi’s dropped by 64%. Both brands rely heavily on exports to the U.S. but have no production facilities there, making them more vulnerable to trade shocks.

Volkswagen and other European carmakers are pushing for a new deal with the U.S. to reduce the current 25% tariff. Talks are underway to match the 15% tariff recently agreed with Japan. But time is running out. A 30% tariff could be enforced from August 1, making things even worse.

Finance chief Arno Antlitz said that a Japan-style deal could help Volkswagen land in the middle of its new forecast range. But if talks drag on, profits may hit the lower end. “The longer we wait, the worse it gets,” he warned. He declined to say if VW would raise car prices to cope with the blow.

So far in 2025, Volkswagen has increased global deliveries by 1.5%. But deliveries to the U.S. have dropped almost 10%; North America still makes up 18.5% of VW’s total sales.

Volkswagen is also struggling with rising electric vehicle costs and slow growth across Europe. The company plans to cut more than 35,000 jobs by 2030 in a major overhaul. Still, Blume remains hopeful, saying Audi and Porsche will likely recover by 2026. “We are hitting the bottom now,” he said, “but we expect momentum to turn.”

Read more on Volkswagen to cut 20,000 jobs by 2030 in major restructuring