Volkswagen profits hit by emissions, tariffs

VOLKSWAGEN is feeling the effects of tightening European emissions regulations and United States tariffs with reports suggesting the German brand’s balance sheet will “barely break even” in the year’s first quarter.

According to Automotive News Europe, Volkswagen’s operating margin fell 0.5 per cent, from 3.9 per cent in the same period last year. The brand hope to achieve a 4.0 per cent operation margin for the full calendar year, which will require it to exceed that target in one or more quarters.

Volkswagen is reportedly cutting costs to offset lower demand in Europe and China. In March, the brand postponed its goal for a 6.5 per cent operating margin in 36 months, as increased competition in China and slower sales elsewhere see it unable to return to pre-pandemic sales levels.

The Trump administration’s tariffs are threatening to hurt Volkswagen’s profits further.

But with cost-cutting measures in place – and momentum for freshly introduced models including the incoming, budget-friendly ID.2 gathering pace – Volkswagen is determined to reach its target for this year.

The marque has announced that it will trim its workforce by more than 35,000 people over the next five years and cut capacity at its German facilities “by several hundred thousand units”.