Volkswagen earnings drop 40% as US Rates Cloud Outlook

Volkswagen’s earnings fell by 40% in the first quarter, as higher manufacturing costs in margins and US rates delayed the German car manufacturer’s prospects. Earnings before tax amounts to € 3.1 billion in the three months to March, from € 5.1 billion a year earlier, the company said on Wednesday. Group ministry margin has dropped to 3.7% from 6%. Volkswagen has dropped profitability as it confronts rising costs and excess capacity at European factories, as well as a weaker demand in China, a key market. Meanwhile, the purchases of electric vehicles in Europe and the US were uneven, and the rates of President Donald Trump threaten to further injure profits. While Volkswagen left its prospects unchanged for 2025, he said that the forecast of up to 5% sales growth did not affect the impact of US rates. However, the company said it now expects an operating return on sales at the bottom of its 5.5% to 6.5% targeted range. European car manufacturers have struggled to judge the full impact of US rates, as the Trump administration still changes its position with warnings, exemptions and delays. Recently, Trump signed an assignment on Tuesday to uplift a few duties on foreign parts and prevent several levies from stacking on top of each other. The move can reduce the total rates imposed on VW models in Chattanooga, Tennessee and Puebla, Mexico, and on Audi and Porsche vehicles sent from Europe. Porsche Ag, Volkswagen’s luxury sports car brand, has reduced its profit prospects this week, referring to the impact of rates and weaker than expected sales of EVs. But uncertainty surrounding rates led to other car manufacturers, including Mercedes-Benz Group, Volvo Car and General Motors, had to completely fall off their predictions. Earlier this month, Volkswagen released its quarterly earnings in advance, pointing out that operating profit was hit by around € 1.1 billion to special items. About € 300 million of the charges are attributed to diesel problems and the US tariff impact on cars sent in March. The German company said on Wednesday that European demand for its new models is strong, with ordering the order to almost 1 million units in the first quarter. © 2025 Bloomberg MP This article was generated from an automatic news agency feed without edits to text. First published: 30 Apr 2025, 12:21 pm Ist