Volkswagen profits plunge as tariffs and China competition hit 2025 results

Tuesday 10 March 2026 - 14:20

By: Dakir Madiha

Volkswagen profits plunge as tariffs and China competition hit 2025 results

Volkswagen reported a sharp decline in profits for 2025, with operating earnings falling by more than half as U.S. tariffs and intensifying competition in China weighed on the German automaker’s performance. The company said it expects only a modest recovery in 2026 as it adapts to what executives described as a fundamentally changed market environment.

Operating profit dropped 53 percent to 8.9 billion euros, down from 19.1 billion euros in 2024, according to the company’s annual results. The figure came in below analyst expectations of about 9.4 billion euros, based on estimates compiled by Visible Alpha.

Revenue remained broadly stable at 321.9 billion euros compared with 324.7 billion euros the previous year. However, the operating margin fell sharply to 2.8 percent, less than half the 5.9 percent recorded in 2024.

Chief executive Oliver Blume said the group now faces a very different operating environment. A major setback came from Porsche, whose stalled electric vehicle strategy significantly reduced profitability. Porsche’s operating profit collapsed by 98 percent to just 90 million euros, while its operating margin fell to 0.3 percent from 14.5 percent a year earlier.

Trade policy also played a significant role. U.S. tariffs on imported vehicles cost Volkswagen around 2.1 billion euros during the first three quarters of 2025 alone, Blume said.

Looking ahead, Volkswagen forecast an operating margin of between 4 percent and 5.5 percent in 2026, with revenue expected to grow between zero and 3 percent. Analysts surveyed by Visible Alpha estimate a margin close to 5.2 percent, near the upper end of the company’s projected range.

Chief financial officer Arno Antlitz acknowledged that even after adjusting for restructuring costs, the group’s 2025 margin of 4.6 percent remains insufficient for the long term. The company plans continued cost reductions as it works toward a long-term operating margin target of 8 to 10 percent by 2030.

The results highlight the dual pressures confronting Europe’s largest carmaker. In China, once Volkswagen’s most profitable market, vehicle deliveries continued to decline as domestic competitors led by BYD expanded their market share. Globally, the group delivered about 9 million vehicles in 2025, roughly unchanged from the previous year.

Blume also warned that further investment in the United States would be difficult without tariff relief, describing the current trade arrangement between the European Union and the United States as asymmetric.

Despite the disappointing results, Volkswagen shares rose more than 2 percent in early trading on the Frankfurt stock exchange as investors focused on the company’s projections for improving margins.