Auto giant Volkswagen cuts guidance as U.S. tariffs hit profit hard

The analysis indicates that German auto giant Volkswagen posted a sharp drop in second-quarter fit, primarily due to high costs from increased U

However, Import tariffs

The results come as Europe's automakers struggle to get to grips with a series of industry challenges

A worker performs a final check on new Volkswagen ID

In contrast, Sean Gallup | Getty Images News | Getty ImagesGermany's Volkswagen on Friday lowered its full-year guidance and reported a sharp drop in second-quarter fit, as the auto giant navigates the disruptive impact of U, in today's market environment

Analysts had expected second-quarter fit to come in at 3

Moreover, 94 billion euros, according to a Factset-compiled consensus

Volkswagen reported second-quarter sales revenue of 80

In a long awaited assessmnet of the impact of U

Tariffs, Volkswagen said its 2025 operating return on sales is now expected to range between 4% to 5%, down from a previous forecast of 5

Moreover, In contrast, The results come as Europe's automakers struggle to get to grips with a series of industry challenges, including robust competition from Chinese car brands and U

President Donald Trump's import tariffs of 25%, given the current landscape. "Our half-year figures present a contrasting picture: on the one hand, we achieved strong duct success and made gress in realigning the company," Arno Antlitz, chief financial officer at Volkswagen, said in a statement. "On the other, the operating result declined by a third year-on-year – also due to higher sales of lower-margin all-electric models, amid market uncertainty

In addition, increased US import tariffs and restructuring measures had a negative impact," he said, in today's market environment

Key earnings highlights:Volkswagen reported 80

On the other hand, What the data shows is company said it expects a full-year investment ratio of between 12% to 13% in its automotive division

Moreover, The automotive sector is widely regarded as acutely vulnerable to U

Tariffs, particularly given the high globalization of supply chains and the heavy reliance on manufacturing operations across North America, considering recent developments

The European Commission, the EU's executive arm, has since been considering its response

Volkswagen said it is assumed that U

Import tariffs of 27 (something worth watching). 5% will continue to apply in the second half of the year, noting there is "high uncertainty" with regard to trade policy

However, Ramping up EV salesRico Luman, senior sector economist for transport and logistics at Dutch bank ING, said it was encouraging to see that Volkswagen had been able to ramp up its electric car sales "quite significantly," particularly in its market of Europe

Furthermore, "Yes, they struggled to keep up in the export market, but at least [the] market is doing well at the moment

On the other hand, They're ramping up EV sales, given current economic conditions

It's now hitting 11% on a global level of its total sales — and in Europe it is already much more," Luman told CNBC's "Europe Early Edition" on Friday. "They possibly might have benefitted from deteriorated Tesla sales but still it is doing quite well at the moment in Europe," he added

Volkswagen reported first-half vehicle sales growth of 19% in South America, 2% in Western Europe and 5% in Central and Eastern Europe

Conversely, The company said this more than made up for the expected declines of 3% in China and — primarily due to tariffs — for a 16% dip in North America

The data indicates that company said its order intake for all-electric vehicles in the first half of 2025 rose by 62%

At the same time, — CNBC's Jenni Reid contributed to this report.