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News

Volkswagen’s Q2 Profit Falls 33% Amid Tariffs and Restructuring Costs

Volkswagen, Europe’s largest carmaker, reported a steep decline in second-quarter net profit, as a mix of trade barriers, regulatory penalties, and internal restructuring weighed heavily on its bottom line. Despite growth in electric vehicle (EV) sales, the German auto giant faces mounting headwinds in a turbulent global market.

From April to June, Volkswagen posted a net profit of €2.29 billion — a sharp 33% drop compared to the same period last year. The company cited significant costs tied to 27.5% U.S. tariffs on car imports and ongoing restructuring efforts as key factors behind the slump.

The downward trend continues from the first quarter, where net profit fell by a staggering 40.6% to €2.19 billion, primarily due to carbon emissions fines and rising customs costs related to global trade tensions.

While second-quarter revenue reached €80.6 billion, it marked a 3% dip year-over-year — a surprising result given a modest 1.2% increase in vehicle deliveries, which totaled 2.27 million units. In contrast, first-quarter revenue had seen a slight bump of 2.8%, landing at €77.56 billion.

Electric Surge Can’t Offset Premium Vehicle Weakness

One bright spot in VW’s quarterly report was the performance of its EV division. Sales of battery-electric vehicles soared by 38%, reflecting the group’s continued push toward electrification and its ambition to compete with Tesla and Chinese EV brands. However, the strong EV momentum was not enough to offset weaker performance in the group’s premium and luxury vehicle segments, which have been hit harder by economic uncertainty and shifting consumer priorities.

Forecast Revisions Reflect Global Volatility

In light of ongoing challenges, Volkswagen revised its full-year 2025 revenue forecast, now expecting results in line with last year rather than the previously anticipated 5% growth. The revision underscores the automaker’s cautious outlook amid political instability, volatile energy and raw material prices, and intensifying global competition.

The group also flagged negative impacts from fluctuating currency exchange rates and tightening environmental regulations across key markets — factors that are reshaping the economics of automotive manufacturing at a global scale.

Navigating a Tense Transition

Volkswagen’s Q2 results serve as a reminder of the complex transition facing traditional automakers. While the group is making headway in the EV space, legacy costs and geopolitical friction continue to disrupt its recovery. As global markets become increasingly fragmented and sustainability demands accelerate, VW’s ability to adapt — both structurally and strategically — will determine how well it can weather the next phase of automotive evolution.

Source: Volkswagen

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Stellantis Reports €2.3 Billion Loss in H1 2025 Amid Tariffs and Restructuring

Stellantis N.V. has released its preliminary and unaudited financial data for the first half of 2025, revealing a challenging period marked by heavy restructuring charges, global shipment declines, and mounting pressure from geopolitical headwinds such as U.S. tariffs. With full financial results set to be disclosed on July 29, these early figures already paint a picture of a company in transition — and under pressure.

The headline numbers speak volumes: net revenues for the first half came in at €74.3 billion, but that was overshadowed by a net loss of €2.3 billion. Adjusted operating income (AOI), a key profitability measure for Stellantis, stood at just €0.5 billion. Industrial free cash flow saw a steep negative swing, landing at -€3.0 billion — a stark reflection of mounting costs and declining volumes.

Transformation in Motion — But Not Yet Paying Off

According to the automaker, the lackluster first half was shaped largely by the “early stage of actions” aimed at improving long-term performance. Executives expect the second half of 2025 to benefit from a more robust product lineup, including new launches from the company’s “Smart Car” B-segment platform.

However, the real blow came from approximately €3.3 billion in pre-tax net charges. These were mostly related to program cancellations, platform impairments, and restructuring, as well as the impact of recently altered U.S. legislation eliminating the CAFE penalty rate. Though these are excluded from AOI calculations, they cast a long shadow over the company’s bottom line.

Further weighing on performance were higher industrial costs, unfavorable mix effects, volatile foreign exchange rates, and the early effects of new U.S. tariffs, which have already cost the company €0.3 billion in net tariffs and disrupted planned production.

Shipment Volumes Slump — Except in Emerging Markets

Globally, consolidated shipments for Q2 2025 stood at 1.4 million units, down 6% year-over-year. North America bore the brunt of this decline, with shipments dropping by 109,000 units, a steep 25% plunge compared to Q2 2024. This decline was largely driven by reduced imports hit by tariffs, as well as weaker fleet sales.

Interestingly, despite the production and shipment woes, U.S. retail sales held steady, and Stellantis’ two biggest North American brands, Jeep® and Ram, posted a combined 13% increase in year-over-year sales, signaling brand resilience amidst turbulence.

In Enlarged Europe, shipments dipped 6% year-over-year as the region contended with a transitional product phase. New B-segment “Smart Car” models — such as the Citroën C3, C3 Aircross, Opel/Vauxhall Frontera, and Fiat Grande Panda — are still ramping up production. Shipments of these models rose by 25,000 units over Q1, marking a 45% sequential increase.

Meanwhile, emerging markets provided a rare bright spot. Shipments in regions outside of North America and Europe rose by 71,000 units, a 22% year-over-year gain. Middle East & Africa surged by 30%, driven by demand in Türkiye and recovering markets like Egypt, Algeria, and Morocco. South America also posted robust growth, with a 43,000-unit increase led by strong sales in Argentina and Brazil, where Stellantis continues to hold a leadership position.

Looking Ahead: Turning the Corner?

With the company having suspended its financial guidance earlier this year, analysts have turned to consensus forecasts to assess performance expectations. This preliminary disclosure appears to be an effort to reset those expectations and provide transparency ahead of the July 29 earnings call, which will be hosted by new CEO Antonio Filosa and CFO Doug Ostermann.

Despite the grim numbers, Stellantis is signaling confidence that the worst may be behind it, banking on its upcoming products and strategic cost actions to deliver results in the back half of 2025. But for now, the road remains bumpy — and all eyes will be on the automaker’s ability to execute its comeback in a rapidly shifting global landscape.

Source: Stellantis

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Volvo Cars Posts SEK 2.9 Billion Core Profit as Turnaround Plan Gains Momentum

Volvo Cars reported an operating result of SEK -10.0 billion for the second quarter of 2025, a figure skewed by significant one-off charges. When adjusted for those exceptional items, however, the company posted a core operating profit of SEK 2.9 billion, signaling that its SEK 18 billion turnaround plan is beginning to gain traction.

The reported loss was primarily driven by an SEK 11.4 billion non-cash impairment tied to revised financial assumptions for the EX90 and ES90 electric vehicle platforms, as well as SEK 1.4 billion in restructuring costs related to the ongoing reduction of 3,000 global positions. Without these items affecting comparability, Volvo’s underlying EBIT margin stood at 3.1%.

Retail sales fell by 12% year-over-year to 181,600 units, and revenues totaled SEK 93.5 billion. Yet despite the dip in volume, CEO Håkan Samuelsson remained upbeat:

“The market continued to be challenging in Q2,” he said. “However, our turnaround actions are starting to show results. In a market with headwinds, we made a clear improvement of free cash flow versus Q1, and our EBIT margin, excluding exceptional items, was slightly higher.”

Turning Point in Volvo’s Transformation

Earlier this year, Volvo launched a sweeping SEK 18 billion cost and cash turnaround plan, now visibly underway. The strategy revolves around three core pillars: profitability, electrification, and regionalisation.

On the profitability front, job cuts and spending reductions are already being implemented, with 1,100 employees having left the company. Efforts to slash material costs include deeper collaboration with Geely Group on procurement and co-developing models for the Chinese market. At the same time, Volvo has slowed its investment pace and reduced working capital demands to boost cash flow.

These efforts are setting the stage for sustainable future profitability, supported by advanced manufacturing techniques such as mega-casting, cell-to-body battery integration, and in-house e-motor development.

EV Acceleration: EX60 and ES90 Lead the Charge

Volvo’s future hinges on electrification, and that strategy remains intact. Development of the born-electric EX60, a key entry into the premium midsize SUV segment, is on track. It will be the first model built on Volvo’s next-gen EV platform — designed for lower cost and better performance.

The ES90 all-electric sedan will arrive this autumn, targeting premium buyers with a zero-emissions offering. Meanwhile, the EX90 — following software improvements — is now fully market-ready and manufactured to meet the high standards of Volvo’s customer base.

Recognizing the transitional role of plug-in hybrid vehicles (PHEVs), Volvo is also preparing to launch the XC70, its first extended-range PHEV, with production starting in Q3. This model is expected to perform strongly in China and other markets where charging infrastructure remains limited.

Going Regional: Adapting to a Shifting Global Landscape

With globalization under strain, Volvo is leaning into regionalisation. It is decentralizing governance, starting with its China and Americas operations, to allow faster responses to local market dynamics.

Volvo is also localizing production to mitigate tariffs and supply chain challenges. The XC60 will now be assembled in Charleston, USA, while in Europe, Volvo is building out its Kosice plant in Slovakia, which will produce the upcoming Polestar 7 and a new Volvo model yet to be revealed.

Looking Ahead: Positioned for Recovery

While macroeconomic conditions remain tough, Volvo’s proactive cost and product strategies are already showing early promise. The EX30, now made in Ghent to avoid tariff exposure, is ramping up sales, while the refreshed 90 Series and new models like the EX60, ES90, and XC70 are expected to drive growth.

“When market sentiment improves, Volvo Cars will be well-positioned for profitable growth,” said Samuelsson. “With a future-proof product line-up and a leaner, more efficient organisation, we’re confident in the path ahead.”

Despite the headline figure, the second quarter represents a turning point for Volvo Cars — a moment when restructuring pain starts giving way to operational gains. If momentum continues, 2026 may mark the beginning of a new, electric-powered chapter in the company’s storied history.

Source: Volvo