VW warns of €5bn tariff hit after first loss since Covid
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Volkswagen has warned of an annual tariff hit of up to €5bn due to higher costs and a decline in US sales, making Europe’s largest carmaker one of the biggest victims of Donald Trump’s trade war.
Rivals GM, Ford and Stellantis have cut their US tariffs cost forecasts after the Trump administration extended relief measures for the sector and took steps to expand production in the US.
Volkswagen could see a continuing impact from higher tariffs and lost volumes in the US despite a trade deal between the US and the EU, chief financial officer Arno Antlitz said.
Volkswagen had expected an increase in sales in the US of 10 per cent this year, but instead has seen the number of vehicles sold decline by 8 per cent. The drop in volumes could bring the total tariff related impact to €5bn, he said.
“We need to prepare for a scenario where tariffs are to stay as part of the operating business. And this clearly means the restructuring work must continue, and we even need to speed up our measures,” he said stressing the need for drastic restructuring measures to lower costs.
VW’s warning comes as Stellantis, the group behind the Jeep, Fiat and Peugeot brands, on Thursday said its net tariff impact would be about €1bn, compared with its previous estimate of €1.5bn for the full year. Ford expects a $1bn hit, while GM has forecast an exposure of about $3bn after mitigation efforts.
This month, the Trump administration extended a rebate scheme announced in April allowing carmakers that assemble vehicles in the US to reclaim up to 3.75 per cent of the retail value of the car for the next year.
The scheme was extended to 2030, allowing car and truck manufacturers to claim the 3.75 per cent value for the next five years.
The reimbursements to offset tariffs on auto parts was also expanded to include engines, but analysts say the impact of the relief measures have been limited for VW and other European carmakers since their portion of US-made vehicles is lower.
Volkswagen on Thursday reported an operating loss of €1.3bn in the third quarter, from a €2.8bn profit in the same three-month period last year, marking its first loss since the start of the Covid-19 pandemic. Analysts expected a loss of €1.7bn, according to a forecast compiled by Visible Alpha.
VW said in September it would book an impairment after Porsche shelved a planned electric car and brought forward the launch of new petrol and hybrid models. The additional charges totalled €4.7bn in the third quarter, the company said.
The decision by the sports-car maker, which is one of 10 brands within the Volkswagen group, came in response to weaker than expected demand for its battery-powered vehicles.
Volkswagen stuck to full-year guidance, restated after its recent profit warning. The company expected an operating profit margin for 2025 of 2 to 3 per cent and a net cash flow in its automotive division of around zero. Volkswagen’s 2024 operating margin was 5.9 per cent.
VW shares were down about 1 per cent on Thursday morning.
The last time VW reported an operating loss was in the second quarter of 2020, when it recorded a loss of €2.4bn.
Volkswagen also said that production at its German plants was secured through to the end of next week, amid an international dispute over chipmaker Nexperia, a key supplier for auto manufacturers. However, the company did not rule out the possibility of short term disruptions.
Antlitz said a resolution to the problem, which began when the Dutch government took control of Nexperia from its Chinese owners, would have to be “political”.
Separately, Stellantis warned of new charges to be booked in the second half as it reviewed product plans and the way warranties were calculated. The company’s shares fell 6 per cent on the charges.
Third-quarter revenue increased 13 per cent from a year earlier to €37.2bn following a recovery in some US sales.
