Volkswagen Group Cuts 2025 Outlook Amid Tariffs, EV Mix and Restructuring Costs

The Volkswagen Group has revised its full-year 2025 financial guidance downward, citing continued pressure from U.S. import tariffs, restructuring expenses, and a growing share of lower-margin electric vehicles in its sales mix.

According to the company’s updated outlook, group sales revenue for 2025 is now expected to remain flat compared to the previous year, abandoning its earlier projection of up to 5% growth. Likewise, the operating return on sales is now forecast to fall between 4.0% and 5.0%, down from the previous 5.5% to 6.5% range.

The guidance cut comes amid a challenging business environment marked by geopolitical tensions, tighter emissions regulations, and intensifying global competition. The Group attributed the weaker outlook in part to higher U.S. import tariffs—which accounted for a €1.3 billion hit in the first half of the year—and significant restructuring costs of €0.7 billion, particularly at Audi, Volkswagen Passenger Cars, and software subsidiary Cariad.

“The operating result declined by a third year-on-year due to higher sales of lower-margin all-electric models and other headwinds,” said CFO and COO Arno Antlitz. “We’re taking the right steps, but we must accelerate efforts to improve earnings and cash flow.”

Operating profit for the first half of 2025 fell 33% to €6.7 billion, with the operating margin dropping to 4.2% from 6.3% a year earlier. Net cash flow in the Automotive Division also turned negative at –€1.4 billion, impacted by M\&A activity—including a €0.9 billion stake increase in Rivian—and payments related to restructuring and tariffs.

Volkswagen now expects automotive net cash flow to range between €1 and €3 billion for 2025, a downward revision from its earlier €2 to €5 billion target. Net liquidity guidance has also been lowered to a range of €31 to €33 billion, down from €34 to €37 billion.

The company emphasized that the outlook depends heavily on the trajectory of U.S. tariffs. The lower end of its guidance assumes the current 27.5% tariff rate remains in place, while the upper range factors in a potential reduction to 10%.

Despite these setbacks, Volkswagen highlighted positive momentum in its EV business in Europe, where it holds a 28% market share and saw a 62% increase in order intake for battery-electric vehicles during the first half. Global vehicle sales edged up slightly to 4.36 million units.

CEO Oliver Blume expressed cautious optimism, pointing to strong product launches and continued demand in key markets. “We expect the positive trend to continue in the second half of the year, supported by our product offensive,” he said.

Still, with mounting external pressures and internal restructuring underway, the company’s lowered guidance signals a more conservative stance as it navigates a volatile automotive landscape.