Toronto, Ontario -- Volkswagen is blaming new U.S. import tariffs for reducing its profit margins during the first half of the year.
The German OEM saw its profits decline US$1.5 billion in the first half of 2025 relative to the first half of 2024. It earned €4.005 billion, down 36.6 percent from the first six months of 2024.
With an €6.7 billion ($10.6 billion) operating result in the first half of 2025 — 33 percent below the 2024 operating result — the operating margin is now 4.2 percent, compared to the 5.6 percent operating margin prior to the increased U.S. tariffs and restructuring.
The company expressed concern about the import tariffs in a July 25 press release. In it, Arno Antlitz, the chief financial officer and chief operating officer of Volkswagen Group, noted the contrast in performance between the first halves of 2024 and 2025. He also highlighted the company’s strong product success in spite of the declining operating result.
“This shows that we are on the right track,” said Antlitz in the press release. “But what really matters is cash in the bank. That’s why we must press ahead with our ongoing programs to improve earnings and pick up the pace where necessary.”
Imported collision repair parts from Canada, China and Mexico, such as airbags and ADAS sensors, are essential to the collision repair industry in the U.S., which depends on these parts because 44 percent of OEM parts used in U.S. vehicles are produced outside of the country.
Volkswagen chief executive officer Oliver Blume reiterated that the company’s underlying strengths and successes during the period would have led to increased profitability, were it not for the imposition of new tariffs.
“Driven by the success of our new products, Volkswagen Group held its ground in an extremely challenging environment,” said Blume. “Supported by our ongoing product offensive and consistently good demand, we expect the positive trend to continue in the second half of the year.”
While vehicle sales fell in North America, they rose everywhere else, totaling to 4.36 million globally in the first half of 2025. South America’s vehicle sales increased 19 percent, Central and Eastern Europe’s sales rose five percent, while Western Europe two percent, making up for the estimated three percent decline in China and16 percent drop in North America.
Volkswagen’s outlook for the remainder of 2025 is based on a slightly slower global economic growth rate compared to 2024 and increased consumer demand due to declining inflation in major economic regions and easing monetary policy. Increased U.S. import tariffs will remain applicable in the second half of 2025 according to Volkswagen’s lower-end forecast for operating result, net cash flow and net liquidity; however, the upper-end forecast assumes tariffs will be reduced to 10 percent.
This fluctuating forecast means Volkswagen cannot be certain of further tariff developments, including their impact and any reciprocal effect, according to the financial report. The investment ratio in the Automotive Division is predicted to decrease between 12 and 13 percent in 2025 and to around 10 percent in 2027.
According to a Claims Journal analysis, the new 25 percent tariff on imported parts could increase auto repair claims costs by 2.7 percent, possibly leading to repairable claims costing $9-11 more per claim.
The rising cost and production delays of OEM parts mean collision repair shops should consider how to mitigate the effects of tariffs, including bulk purchasing, diversifying suppliers, strategic inventory management and even exploring alternative part sources.
