German carmaker Volkswagen AG’s first-quarter profit fell 40% in 2025 due to high production costs and US tariffs, which have clouded the company’s outlook.
Volkswagen Group CFO Arno Antlitz called the start of the year “mixed.” The decline in profitability is due to Volkswagen facing rising costs and excess capacity at its European plants, as well as weak demand in China, which is a key market for the automaker. At the same time, purchases of electric vehicles in Europe and the US have been uneven, and the tariffs imposed by Washington threaten to further hurt profits.
The group’s operating margin fell from 6% to 3.7%.
European automakers are finding it increasingly difficult to predict the impact of US tariffs as the White House continues to change its position with reservations, exceptions and delays.
Porsche lowered its profit forecast this week, citing the impact of tariffs and weaker-than-expected electric vehicle sales. However, uncertainty surrounding the tariffs has forced other automakers, including Mercedes-Benz Group, Volvo Car and General Motors, to abandon their forecasts altogether.
Earlier, media reported that US President Donald Trump intends to soften some of the tariffs on automakers. This will give them time to relocate production to the United States.
