Tariffs Update: Volkswagen Takes One On The Kisser

While automakers have been on edge about the tariffs President Trump has promised, Volkswagen is the first to show significant financial damage it blames on the trade war. Just today, the German car company reported a 37 percent drop in first quarter operating profits at 2.9 billion euros (about $3.3 billion USD) and reportedly said the economic turbulence caused by the Trump administration is the reason.

Congress wants to tax you for owning a car.

We know everyone’s going to have their take on that. Some will just believe what VW says, others will characterize this as an excuse for poor management, etc. We would just like to bring up that in the recent past Chinese competition in the European market was also cited as a reason for the automaker’s poor performance.

Whatever the reason, industry analysts were expecting Volkswagen to turn a higher operating profit for Q1 2025. We’ll let financial experts analyze the company’s statements and give their opinion on what happened, but there are some curious details we want to touch on.

Making things more interesting is the fact VW sold more cars in the first quarter of this year versus the first quarter of 2024. The 2.1 million units it moved worldwide was a 0.9 percent increase, with Western Europe seeing a 29 percent increase in orders.

In other words, the company sold more cars, didn’t achieve the operating profit analysts thought it should, plus its net cash flow of negative 800 million euros was better than in the first quarter of last year.

We’re not quite clear on how all of this is Trump’s fault, but that’s who’s being blamed, at least as it’s portrayed by CBT News. We get everyone’s bracing for impact with the tariffs, but it sounds like Volkswagen is doing okay with a little bit of mixed bag for this first quarter. We guess the automaker’s leaders are expecting things to take a dive as the year progresses, but that’s how economic cycles work.

If VW continues taking financial hits, do you think Elon Musk would do a hostile takeover? Or maybe Toyota could gobble up the German automaker. Things sure are getting interesting in 2025.

Image via Volkswagen