Volkswagen lowers guidance as tariffs hit profit in second quarter

BERLIN: Volkswagen on Friday gave its first assessment of how U.S. President Donald Trump’s trade war with Europe is expected to impact its 2025 earnings after tariffs dealt a blow to the German auto giant’s operating profit in the second quarter.

Europe’s biggest carmaker now expects an operating return on sales in the range of 4-5%, compared with a previously forecast 5.5-6.5% range, the company said, giving its long awaited assessment of the impact of tariffs on its business.

Full-year sales are expected to be level with the previous year, versus a previously forecast rise of up to 5%.

Volkswagen and its peers are pressing European trade negotiators to strike a deal to replace a 25% tariff on their cars in place since April.

Volkswagen reported an operating profit of 3.8 billion euros ($4.46 billion) in the quarter ended June 30, down 29% on the previous year, citing tariffs and restructuring costs, as well as higher sales of lower-margin all-electric models.

Car sales data for June underpinned a broader slowdown in Europe’s struggling auto sector - and showed Volkswagen among the laggards as the company undergoes a major overhaul to cut over 35,000 jobs by the end of the decade.