Volkswagen Hit Hard by Trump’s

Volkswagen has indeed been significantly impacted by trade policies implemented by the current US administration, particularly the imposition of tariffs. Here’s a summary of the situation based on recent reports:

Financial Impact:

Profit Decline: Volkswagen reported a sharp drop in second-quarter profits in 2025, with net profit falling 38.5% year-on-year to €4.48 billion ($5.26 billion). This decline is largely attributed to US tariffs, increased production costs, and higher sales of lower-margin electric vehicles.

Tariff Costs: The company stated that tariffs imposed by the US administration cost it €1.3 billion ($1.5 billion) in the first half of 2025 alone.

Lowered Outlook: Volkswagen has cut its financial outlook for the year, revising its expected operating return on sales to a range of 4% to 5% from a previous forecast of 5.5% to 6.5%. They also anticipate flat revenue for 2025, down from a previous forecast of a 5% gain. This revised guidance explicitly incorporates the impact of tariffs.

Affected Brands: The tariff pain has been particularly felt by Volkswagen’s luxury brands, Audi and Porsche, with their operating profits slumping significantly (64% for Audi and 91% for Porsche in Q2 2025).

Sales and Production:

North American Sales Down: Sales volume in North America fell 16% in the first half of 2025, primarily due to tariffs.

Global Sales Stable: Despite the challenges in North America, global vehicle sales for Volkswagen were slightly above the first half of 2024 (4.36 million vehicles in H1 2025 vs. 4.34 million in H1 2024). Order intake for vehicles in Western Europe also rose by 19%.

Mexican Production at Risk: Volkswagen operates Mexico’s largest auto manufacturing plant in Puebla, which produces models like the Jetta, Tiguan, and Taos primarily for export to the US. A 25% tariff on Mexican imports threatens to make a significant portion of these sales uncompetitive, potentially forcing costly and time-consuming relocation of production to the US to avoid steep import fees.

Domestic Production Advantage: Models manufactured in the US, such as the Volkswagen Atlas and certain ID.4 variants produced in Chattanooga, Tennessee, are less susceptible to tariff-related price increases. Volkswagen is actively pursuing more US investment and expanding its footprint to mitigate the tariff

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