Berlin (AFP) – German auto giant Volkswagen said Wednesday that tariffs on car imports into the United States ordered by President Donald Trump had dragged down its first quarter operating profit. Europe’s largest auto manufacturer said its operating profit in the first three months of 2025 fell to 2.8 billion euros ($3.1 billion) from 4.6 billion euros in the same period last year.
The result “deviates significantly” from market expectations that operating profit would come in at around four billion euros, Volkswagen said in a statement. The steep drop was due to one-off impacts which totalled 1.1 billion euros, the group said. These included 600 million euros in provisions related to the European Union’s emissions targets for auto manufacturers and another 200 million euros to restructure Volkswagen’s struggling software unit.
In addition, Volkswagen said it felt a 300 million euro impact from adjustments in “provisions for the diesel issue” and a write down in the cost of “vehicles in transit in connection with the import duties introduced in the United States at the beginning of April”. Trump last month announced a 25-percent tariff on autos imported to the United States, which is the number one destination for German car exports.
Volkswagen — a 10-brand group which also includes Audi, Porsche, Seat and Skoda — sold just over one million vehicles in North America last year, 12 percent of its sales by volume. About 65 percent of the cars it sells under the Volkswagen brand are shipped into the United States. The figure rises to 100 percent for its high-end Audi and Porsche brands.
The hit to Volkswagen’s operating profit came despite the group’s sales revenue for the first quarter rising to 78 billion euros from 75.5 billion euros in 2024, an increase of three percent. The Wolfsburg-based group kept its outlook for 2025, but noted that “announced increased import tariffs, particularly in the United States of America, are still not included in the forecast”. The omission was down to the fact that “the effects and their interactions cannot be conclusively assessed at present”.
Volkswagen, which has struggled with foreign competition, said it currently expected sales revenue to increase five percent over the full year in 2025. The auto group will publish its full results for the first quarter on March 31.
© 2024 AFP
