Volkswagen posts 37% drop in first-quarter profit, says Trump tariffs could weigh on outlook

German auto giant Volkswagen on Wednesday reported a substantial drop in first-quarter profit as the carmaker navigates the disruptive impact of U.S. tariffs on the global car industry.

Europe’s biggest carmaker reported operating profit of 2.9 billion euros ($3.3 billion) for the first three months of the year, down 37% from the same period last year.

Volkswagen reported first-quarter sales revenue of 77.6 billion euros, up 2.8% from the first quarter of 2024. The company cited higher vehicle sales in markets outside China as underpinning the increase.

Earlier this month, Volkswagen warned that first-quarter operating profit would likely come in at 2.8 billion euros, citing special effects in the magnitude of 1.1 billion euros.

In an ad hoc statement on April 9, the company recognized that the preliminary first-quarter result deviated significantly from analyst expectations of around 4 billion euros.

“As expected, the Volkswagen Group experienced a mixed start to the fiscal year,” Arno Antlitz, chief financial officer and chief operating officer at Volkswagen Group, said in a statement.

“Given the current volatile global economic situation, it is even more important to focus on the levers within our control. This means complementing our great product range with a competitive cost base – so we can ensure to succeed also in rapidly changing global markets,” Antlitz said.

Other first-quarter highlights included:

• Volkswagen reported 2.1 million vehicle sales in the first three months of the year, 0.9% above the same period in 2024.
• First-quarter order intakes for vehicles in Western Europe jumped by 29% compared to the previous year.
• Net cash flow came in at -0.8 billion euros, above the previous year.

Volkswagen posted operating profit of 4.59 billion euros for the first quarter of 2024 and 6.15 billion euros for the final three months of 2024.

Looking ahead, Volkswagen said it expects operating return on sales, net cash flow and net liquidity to come in at the lower end of annual forecasts, citing political uncertainty, increasing trade restrictions and emissions regulations.

Shares of Volkswagen traded 0.9% higher at 8:23 a.m. London time. The stock price is up nearly 10% year-to-date.

The results come as carmakers face uncertainty regarding U.S. President Donald Trump’s ongoing auto tariffs.

The sector is known to be acutely vulnerable to Trump’s back-and-forth trade policy, particularly given the high globalization of supply chains and the heavy reliance on manufacturing operations across North America.

Trump on Tuesday signed an executive order to ease some auto tariffs, providing some relief to the global sector.

Tariffs of 25% on imported vehicles into the U.S. will continue, but the new measures aim to reduce the overall level of duties on vehicle imports that had resulted from separate levies — such as an additional 25% tariffs on steel and aluminum — “stacking” on top of one another.

Under the latest White House order, additional 25% tariffs on auto parts that were set to start by May 3 will also still take effect, but vehicles that go through final assembly in the U.S. will be able to qualify for partial reimbursements on those levies for two years.

— CNBC’s Michael Wayland & Michele Luhn contributed to this report.