Volkswagen’s Profit Under Pressure From Tariffs and Competition
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The German auto giant saw its earnings fall last year, as it pushed ahead with a restructuring in the face of tariff uncertainty in the United States and lost market share in China.
By Melissa Eddy
Reporting from Volkswagen’s headquarters in Wolfsburg, Germany
Volkswagen’s earnings dropped last year and its profitability may improve only marginally this year, as the automaker repositions its global business to deal with shifting trade policies in the United States and tough competition from its Chinese rivals.
Volkswagen is Europe’s largest carmaker, and its reach extends across the globe. While the company’s size and scale served it well for decades, in recent years it has become a headache, especially since President Trump upended global trade practices by threatening tariffs against America’s largest trading partners.
Volkswagen said on Tuesday that its revenue was flat while operating profit fell 15 percent in 2024, citing “a significant increase in fixed costs” linked to restructuring. For this year, the company expects its operating profit margin to be in a range of 5.5 to 6.5 percent, roughly the same as the 5.9 percent margin it recorded last year.
“Our outlook reflects the global economic challenges and the profound changes that are happening in the industry,” said Arno Antlitz, chief financial officer of Volkswagen. Among the challenges, he said, were “an environment of political uncertainty, expanding trade restrictions and geopolitical tensions.”
The company’s restructuring costs included nearly $1 billion for a severance pay program linked to the administrative division of the Volkswagen brand. The company also reached an agreement last year with the IG Metall union that included plans to cut 35,000 jobs through retirement and attrition, but without any immediate closures of the company’s 10 factories in Germany.
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