Volkswagen Reports €1 Billion Loss Due to Tariffs and Porsche Challenges

Volkswagen, Europe’s largest carmaker, has reported its first quarterly loss in five years, amounting to €1.07 billion, due to the impact of US tariffs and a troubled electric shift at its subsidiary Porsche. The loss, which occurred in the July-to-September period, is the company’s first since the second quarter of 2020, when it was affected by the coronavirus pandemic.

The German auto giant attributed the loss to higher tariffs, adjustments to its product strategy at Porsche, and write-downs to Porsche’s value, which cost the company €7.5 billion. Volkswagen finance boss Arno Antlitz stated that the result is “much weaker” compared to the same period last year. The company warned that US President Donald Trump’s tariff policies are costing it €5 billion annually.

The challenges faced by Volkswagen are part of a broader struggle for traditional manufacturers in Europe’s struggling top economy. The company is dealing with fierce competition in key markets, such as China, and a slower-than-expected shift to electric cars. Porsche, once the jewel in Volkswagen’s crown, has become a headache for the company due to intense pressure from local competitors in China and weak demand for electric sports cars.

Volkswagen is also grappling with US tariffs on car exports from the European Union, which are subject to a 15% tariff under an EU-US deal. The company is exploring options to offset the tariff impact, including US price increases and the possibility of opening an Audi factory in the country. Despite the net loss, Volkswagen’s revenues grew by 2.3% to €80.3 billion, helped by a slight increase in vehicle sales globally.

The company is also facing a chip crisis, which could lead to plant stoppages if supplies run dry. Volkswagen has warned that it cannot rule out production disruptions and is searching for alternative sources. The European auto lobby has warned that chip supplies are “rapidly dwindling” due to a ban on exports from China. Volkswagen’s finance boss stated that the company is “safe until the end of next week” but is securing production on a day-by-day, week-by-week basis.