Volkswagen Q1 operating profit falls 14% amid tariffs, competition

German automaker Volkswagen reported a 14.3% year-on-year decline in first-quarter operating profit on Thursday, citing higher US tariffs, geopolitical tensions and intensifying competition from Chinese carmakers.

Volkswagen posted €2.5 billion ($2.92 billion) in operating profit for the January-March period, missing market expectations.

Sales revenue fell 2.5% to €75.66 billion ($88.2 billion), slightly above analysts' forecasts.

"Wars, geopolitical tensions, trade barriers, stricter regulations, and intense competition are creating headwinds. In this challenging environment, we have managed to make tangible progress," CEO Oliver Blume said in a statement.

European automakers are facing multiple pressures, including trade uncertainty, high production costs, slower electric vehicle adoption and tightening regulations.

Volkswagen is also undergoing a broad restructuring, including planned job cuts and a major product push aimed at improving profitability. Around 50,000 jobs are expected to be cut in Germany by the end of the decade.

The company is also contending with growing competition from Chinese automakers, particularly in electric vehicles, while the Middle East crisis poses risks to demand for its premium brands such as Porsche and Audi.

Volkswagen said it expects its operating return on sales to be between 4% and 5.5% in 2026, compared with 2.8% in 2025.

Shares of Volkswagen were down 19.7% year-to-date as of Wednesday's close.