Volkswagen recently adjusted its annual profit margin projection to show that it will reach the minimum level of its original 5.5-6.5% guidance range. A profit warning from Porsche which is owned 75% by Volkswagen represented the main factor resulting in this profit margin adjustment.

Advertisment

The finance director of Volkswagen Arno Antlitz tells analysts that the company has not included potential impacts from U.S. President Donald Trump's import tariffs because the forecast is still in development. Analysts repeatedly questioned Antlitz about the tariff impact but the finance chief confirmed that such predictions were too early to determine.

The financial executive Antlitz expressed that Volkswagen remained dedicated to implementing cost reduction strategies while dealing with the existing global market uncertainties. European battery-electric vehicle sales jumped significantly during Q1 so the rising demand squeezed profit margins for the company. According to Antlitz the forthcoming ID.2 electric vehicle planned for Spain will probably deliver profits on par with conventional cars but the market requires continued pricing support for electric vehicles.

Also Read | Volkswagen's Europe EV sales surge, more than double in first quarter

Advertisment

The company stands among Mercedes-Benz and Stellantis along with General Motors and Volvo Cars regarding their modified or withdrawn financial outlook caused by changing U.S. trade regulations. April and May damages totaled significantly after Porsche experienced major earnings losses because of its absence of U.S. manufacturing base.

The Volkswagen Group suffers significantly from U.S. tariffs and its premium brand Audi does not have facilities located in the United States. While Audi has indicated plans to announce a U.S. manufacturing location for some of its top-selling models this year, the group is also exploring the possibility of building more models in the U.S., potentially at a new factory being established for its Scout brand in South Carolina, although no final decisions have been made.

In the meantime, Volkswagen's cost-cutting program, agreed upon with unions last year, is reportedly progressing well, with factory costs at the VW brand decreasing and headcount reduced by approximately 7,000 employees. Despite a 40% drop in first-quarter earnings, Volkswagen anticipates its net cash flow for the year to be towards the lower end of its 2 billion to 5 billion euro forecast, with net liquidity remaining close to 34 billion euros.