State actions not found attributable to the government, according to the Committee's findings.
The Volkswagen Group, Europe's largest automaker, has reported a significant drop in profits for the second quarter of 2025. The group's operating result fell by over 29% to €3.83 billion, missing analyst expectations and prompting Volkswagen to lower its full-year profitability outlook.
Despite delivering 1.3% more vehicles globally, with electric vehicle (EV) deliveries rising sharply by about 47%, several financial and regulatory headwinds led to this earnings decline.
U.S. Tariffs and Restructuring Costs
The main factors contributing to the drop in profits were higher U.S. import tariffs, which caused losses of approximately €1.3 billion, and restructuring costs amounting to around €700 million. These factors significantly impacted profitability, leading to a 29% decline in operating profit compared to the previous year.
Electric Vehicle Challenges
The expansion of EV sales also put pressure on overall profitability. Despite strong volume growth, electric vehicles have slimmer margins compared to traditional vehicles. As Volkswagen invested heavily in battery technology and supply chains, this shift towards EVs further reduced earnings.
Regulatory Hurdles
Adverse effects from CO2 fleet regulations in Europe and the U.S., exchange rate fluctuations, and ongoing restructuring expenses also weighed on results.
Audi and Porsche's Challenges
Audi's operating profit in the second quarter decreased by two-thirds to €550 million, and Porsche's operating profit in the car business, excluding financial services, was €154 million, down from €1.7 billion a year ago.
To reduce costs, Audi plans to cut 7,500 jobs, and Porsche at least 1,900. The core Volkswagen brand, however, is financially benefiting from the group's cost-cutting program, which aims to cut around 35,000 jobs by 2030.
The Bright Side
Despite these challenges, there are positive signs. The order books for electric vehicles are well-filled, according to CEO Oliver Blume. Volkswagen has a 28% market share in Europe for EVs, a significant achievement in the rapidly growing EV market.
In response to the lower profits, Blume aims for revenue at the previous year's level, instead of up to 5% growth. So far, 20,000 employees have agreed to job cuts, mostly through early retirement, and 4,000 jobs have already been cut.
The Volkswagen Group expects lower profits in the current year due to US tariffs and the weakness of Porsche and Audi. The group's revenue decreased by 3% to €80.6 billion, despite slightly increased deliveries. The half-year profit fell "also due to the less profitable E-models". The operating profit margin on sales is expected to be between 4.0% and 5.0%.
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- In the face of higher U.S. import tariffs causing losses of €1.3 billion and restructuring costs amounting to around €700 million, the automotive industry's finance sector has significantly impacted the operating profit of the Volkswagen Group, causing a 29% decline compared to the previous year.
- Despite Volkswagen's electric vehicle (EV) deliveries rising sharply by about 47%, the challenge of slimmer margins for EVs compared to traditional vehicles, coupled with regulatory hurdles, adverse effects from CO2 fleet regulations, exchange rate fluctuations, and ongoing restructuring expenses, have put pressure on the automaker's overall profitability.
