Volkswagen Group, the German automaker, saw its net profit for the second quarter of this year plummet by more than 30% compared to the same period last year. The company was hit hard by costs exceeding 2 trillion won, resulting from U.S. automotive tariffs imposed since April this year.
On the 25th (local time), Volkswagen Group announced in its earnings report that operating profit for the second quarter fell by 29.4% year-on-year to 3.834 billion euros (approximately 6.22 trillion won), while net profit dropped by 36.3% to 2.291 billion euros (about 3.71 trillion won). The operating profit margin also declined from 6.5% in the second quarter of last year to 4.7% this year.
Volkswagen stated that additional expenditures of over 1.3 billion euros (about 2.1 trillion won) due to U.S. tariffs had a negative impact on its performance, and as a result, the company lowered its operating profit margin forecast for this year from the previous 5.5?6.5% to 4.0?5.0%. Volkswagen’s sales volume in the first half of this year increased by 19% in South America and 2% in Western Europe, but decreased by 16% in the United States and 3% in China.
Since April, European-made cars exported to the United States have been subject to a total tariff rate of 27.5%, which includes the existing 2.5% and an additional 25% item-specific tariff. Japan recently concluded trade negotiations with the United States, reducing its auto tariff to 15%, while Europe has yet to finalize such negotiations. German automakers, including Volkswagen, are demanding that the U.S. exclude export volumes equivalent to those produced at their local factories from the tariffs. Among Volkswagen Group’s affiliates, Audi, which does not have local production facilities, is even considering building a new plant in the United States.
Arno Antlitz, Volkswagen’s Chief Financial Officer (CFO), emphasized during a conference call, "Tariffs are likely to remain a continuous cost burden. We will have to work harder to offset their impact."
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