Volkswagen cut its 2025 forecast after U.S. tariffs slashed €1.3 billion from profits, but strong EV demand and European sales offer signs of recovery.

Volkswagen Group has lowered its financial guidance for 2025 after U.S. import tariffs led to a €1.3 billion decline in income during the first half of the year. The carmaker reported an operating result of €6.7 billion for the first six months of 2025, marking a 33 percent drop compared to the same period last year.

Sales revenue remained relatively flat at €158.4 billion. The company said the drop in profit was due to the tariffs, €700 million in restructuring costs, and a higher volume of lower-margin electric vehicle sales.

CFO and COO Arno Antlitz stated that, when excluding these factors, the second-quarter operating margin was close to 7 percent, which he described as the upper end of internal expectations.

Volkswagen is also facing pressure to reduce costs after reporting a negative net cash flow of €1.4 billion during the same period. Despite the financial strain, Volkswagen’s shares rose more than 3 percent by midday Friday in European trading.

While U.S. sales fell by 16 percent due to tariffs, a 19 percent increase in South America and steady growth across Western and Eastern Europe helped offset the decline. In the European Union, where new car sales dropped by 1.9 percent overall in the first half of 2025, Volkswagen’s sales rose by 2.3 percent, driven by strong demand for Volkswagen, Skoda, and Cupra models.

The automaker also reported a 62 percent increase in electric vehicle orders. CEO Oliver Blume said the company holds a 28 percent market share in Europe’s EV segment and noted that order books remain strong.

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