Pasadena, California — Volkswagen, one of the world’s leading automakers, has reported a significant decline in its first-quarter profits as it grapples with the ongoing ramifications of U.S. tariffs on the global automobile market. The German company’s operating profit for the first three months of 2025 fell to €2.9 billion ($3.3 billion), marking a 37% decrease from the same quarter last year.
Despite the profit slump, Volkswagen’s sales revenue rose by 2.8% to €77.6 billion, driven by increased vehicle sales in markets outside of China. The automaker had earlier projected an operating profit of approximately €2.8 billion, factoring in special financial effects that amounted to about €1.1 billion. However, this preliminary result fell short of analysts’ expectations, which anticipated around €4 billion in operating profit.
Arno Antlitz, Volkswagen’s chief financial officer and chief operating officer, acknowledged the mixed performance in an official statement. He emphasized the importance of focusing on elements within the company’s control amid the current unpredictable global economic landscape. “Enhancing our competitive cost structure alongside our diverse product offerings is crucial for navigating these rapidly evolving markets,” Antlitz stated.
In terms of sales performance, Volkswagen recorded a total of 2.1 million vehicles sold during the first quarter, reflecting a 0.9% increase compared to last year. Additionally, the company saw a 29% rise in vehicle order intakes in Western Europe. However, net cash flow presented a challenging picture, with a drop to -€0.8 billion, contrasting with positive flow from the previous year, despite the broader sales boost.
Looking ahead, Volkswagen is anticipating that its operational return on sales, net cash flow, and liquidity will fall at the lower end of its annual forecasts. This outlook is shaped by a combination of increasing political uncertainties, rising trade barriers, and stricter emissions regulations.
The automotive industry remains on edge due to ongoing discussions surrounding U.S. tariffs imposed by President Donald Trump. The sector is particularly vulnerable due to the extensive globalization of supply chains and reliance on manufacturing operations throughout North America. Recently, Trump signed an executive order aimed at alleviating some auto tariffs, though a 25% tax on imported vehicles remains in effect. The order seeks to lower the cumulative impact of these tariffs, which have been described as “stacking” upon one another.
The latest directive will also see the continuation of additional 25% tariffs on auto parts, anticipated to take effect in May. Nonetheless, vehicles assembled in the U.S. will be eligible for partial compensation on these levies for a period of two years, providing some measure of relief for the industry.
Amid these challenges, Volkswagen’s stock has shown resilience, climbing nearly 10% since the start of the year, indicating a degree of investor optimism despite the hurdles facing the company. This complex backdrop underscores the volatility and rapid changes in the global automotive market, as manufacturers aim to adapt and thrive amidst shifting economic conditions.