Germany’s Volkswagen has warned of another difficult year after reporting a steep fall in profits for 2025, with United States trade tariffs, intensifying competition in China, and a costly strategic shift at Porsche weighing on Europe’s largest carmaker.
The German automotive group said operating profit fell to €8.9 billion in 2025, down 53% from the previous year, while net profit dropped 44% to €6.9 billion.
Revenue remained largely flat at around €322 billion, compared with €324.7 billion in 2024, according to the company’s annual results published Tuesday by Volkswagen AG.
Despite the weak result, Volkswagen shares rose in early trading in Frankfurt, supported by a broader rally in European equities.
The company’s stock, however, remains more than 12% lower since the start of the year.
Volkswagen cited U.S. import tariffs, weaker performance in China and restructuring costs linked to its electric vehicle (EV) strategy as key factors behind the decline.
The automaker's chief financial officer, Arno Antlitz, described 2025 as “really challenging”, pointing to geopolitical tensions, new trade barriers and intensifying competition.
In an interview with CNBC, Antlitz said the group had nevertheless managed to increase market share slightly in Europe and held more than 25% of the region’s electric vehicle market.
“We increased our market share slightly despite increased Chinese competition,” he said.
Volkswagen delivered about 8.98 million vehicles worldwide in 2025, a decline of 0.5 % from the previous year.
Analysts surveyed by LSEG had expected an operating profit of about €9.4 billion.
The company forecasts only modest growth ahead and expects revenue in 2026 to likely rise between 0 and 3%.
It expects the operating margin to recover to between 4 and 5.5% after falling to 2.8% in 2025, compared with 5.9% a year earlier.
The results come as the global automotive sector confronts structural shifts, including the uneven transition to electric vehicles and rapidly strengthening Chinese manufacturers.
In China, Volkswagen’s most important overseas market, domestic brands such as BYD, Geely and Nio have expanded market share and narrowed the technological gap with Western rivals.
Meanwhile, the reintroduction of 25% tariffs on imported vehicles under policies pursued by U.S. President Donald Trump has increased costs for manufacturers reliant on global supply chains and cross-border production.
The pressure has been particularly acute at Porsche AG, the luxury sports car brand majority owned by Volkswagen.
Porsche’s operating profit collapsed to about €90 million in 2025 from roughly €5.3 billion the previous year.
This reflects a sharp drop in Chinese sales and the financial impact of a strategic pivot back toward combustion-engine models after an aggressive push into electric vehicles.
Volkswagen CEO Oliver Blume has vowed to intensify cost reductions and restructuring efforts, including plans to eliminate around 50,000 jobs in Germany by 2030 across brands including Audi and Porsche.
The company had already agreed with labour representatives to cut about 35,000 positions through voluntary measures as part of a programme aimed at saving roughly €15 billion.
Blume told shareholders the company was operating “in a fundamentally different environment” marked by geopolitical tensions, new trade barriers and shifting demand for electric vehicles.
The downturn marks Volkswagen’s weakest financial performance since the aftermath of the Volkswagen diesel emissions scandal.
The company shocked markets by admitting installing software designed to cheat emissions tests, a crisis that ultimately cost the group more than €30 billion in fines, settlements and vehicle recalls worldwide.
