Germany’s Volkswagen on Tuesday reported a sharp drop in annual operating profit and flagged another tough year ahead as the auto giant continues to grapple with U.S. tariffs and competition in China.
Europe’s biggest carmaker posted 2025 operating profit of 8.9 billion euros ($10.4 billion), down 53% from the year prior, citing U.S. tariffs, currency effects and a strategic shift at Porsche. Analysts had expected annual operating profit to come in at 9.4 billion euros, according to LSEG consensus data.
Full-year revenue held steady at nearly 322 billion euros, compared to 324.7 billion euros in 2024, and the company’s outlook for sales growth is relatively modest in 2026. Volkswagen said it expects revenue to develop in a range between 0% to 3% this year, falling short of analyst expectations.
The company also said it anticipates an operating margin of between 4% and 5.5% in 2026, after coming in at 2.8% in 2025, down from 5.9% a year earlier.
Arno Antlitz, chief operating officer and chief financial officer at Volkswagen, described 2025 as a “really challenging” year but said the company remains “well positioned” in Europe.
“We increased our market share slightly despite increased Chinese competition. In electric vehicles, we even achieved a market share of more than 25%, 27%, so more than in the combustion engine segment,” Antlitz told CNBC’s Annette Weisbach on Tuesday.
Shares of Volkswagen rose 4% during early morning deals. The stock is down more than 12% year-to-date.
No major supply constraints from Iran war
The results come as Europe’s automakers struggle to get to grips with a series of industry challenges, including robust competition from Chinese car brands and U.S. President Donald Trump’s import tariffs.
The automotive sector is widely regarded as acutely vulnerable to U.S. tariffs, particularly given the high globalization of supply chains and the heavy reliance on manufacturing operations across North America.
Asked about the sprawling Middle East crisis and the potential impact on the company given heightened oil price volatility, Volkswagen’s Antlitz said: “This crisis is obviously concerning for all our partners and customers in the region and their families.”
He added: “In terms of effect on our business, so far it is limited. In terms of oil or gas or energy, we have long-term contracts so we are basically hedged on that side and currently we also do not see major supply constraints.”
Source: CNBC