Volkswagen Group Faces Operating Profit Decline in H1 2025
Volkswagen Group experienced a significant 33% decrease in its operating profit to €6.7bn ($7.88bn) for the first half (H1) of 2025. This decline is primarily attributed to the impact of increased US import tariffs, which cost the company €1.3bn ($1.52bn), along with restructuring provisions and CO₂ regulatory expenses.
The company’s operating margin before the tariff and restructuring costs stood at 5.6%, but the actual operating return on sales for H1 2025 dropped to 4.2%. Despite this, sales revenue remained stable at €158.3bn ($185.8bn) in H1 2025, closely matching the previous year’s figures.
However, the automotive division saw a negative net cash flow of €1.4bn, contrasting with the previous year’s positive €0.4bn. This decline was driven by merger and acquisition expenditures, including €0.9bn for additional Rivian shares, restructuring payments, and US tariff costs.
Vehicle sales for H1 2025 saw a slight increase to 4.36 million units compared to the previous year, with growth in Western Europe, South America, Central and Eastern Europe offsetting declines in China and North America. The Core brand group achieved a 4.8% operating margin in the H1, showcasing cost efficiency.
Looking ahead, Volkswagen Group has adjusted its 2025 outlook, anticipating sales revenue to remain consistent with the prior year and projecting an operating return on sales between 4.0 and 5.0%. The investment ratio in the automotive division is expected to be between 12 and 13%, with automotive net cash flow ranging from €1bn to €3bn. Net liquidity is forecasted to be between €31bn and €33bn.
Uncertainties surrounding US import tariffs, currently at 27.5%, pose potential risks for H2 of 2025. The company’s forecasts consider both the continuation of these tariffs and a possible reduction to 10% following a pending US-EU trade deal. Volkswagen Group anticipates challenges from political uncertainty, trade restrictions, competitive pressures, market volatility, and stringent emissions regulations.
Volkswagen Group COO and CFO Arno Antlitz commented on the results, stating, “Our half-year figures present a contrasting picture: on the one hand, we achieved strong product success and made progress in realigning the company. On the other, the operating result declined by a third year-on-year – also due to higher sales of lower-margin all-electric models.”
In conclusion, Volkswagen Group’s financial performance in H1 2025 reflects the challenges posed by external factors such as US import tariffs and restructuring costs. The company remains focused on navigating these obstacles while striving for efficiency and growth in the automotive market.
