(Update: share price, conference call statements, further details and background.)
WOLFSBURG (dpa-AFX) - The VW Group faced continued margin pressure in the first quarter amid a challenging operating environment. Results were primarily weighed down by US import tariffs and the cessation of ID.4 electric vehicle production in the United States. CEO Oliver Blume provided no specific details on Thursday regarding the previously signaled further restructuring of the Wolfsburg-based automaker. However, the executive is not shying away from unconventional ideas - for instance, considering the production of Chinese models at German plants. After initial skepticism, the stock recently trended higher.
Shortly after the market open, the shares slipped by approximately two percent to their lowest level since April 2025, but later recovered to gain 1.4 percent, reaching 86.64 euros in afternoon trading. Analyst Jose Asumendi of JPMorgan pointed to strong cash flow - a metric many investors had focused on - noting that it came in significantly better than he had anticipated.
In contrast, Goldman Sachs expert Christian Frenes noted that VW missed expectations on operating margins. He attributed this to the Audi-led brand group and the truck holding company Traton, as well as one-off costs. Market expectations for earnings per share are now likely to decline, also due to weak business performance in China.
The operating margin for the quarter stood at 3.3 percent, approximately 0.4 percentage points below the previous year's figure, according to the DAX-listed group. Analysts had on average expected 3.7 percent.
According to CFO Arno Antlitz, Europe's largest automaker achieved an underlying operating margin of 4.3 percent before special items. This figure excludes restructuring costs of 0.8 billion euros, including 0.5 billion euros related to the end of ID.4 production in the US. The remaining amount consists of costs for efficiency programs within the group's mass-market brands and at the commercial vehicle holding Traton.
Antlitz also views the adjusted return as remaining at a level that is far too low. The group is currently working to launch another major efficiency program. This is intended to significantly reduce costs to remain competitive against Chinese providers and to fund investments. Production capacity is set to be reduced by another million units to nine million vehicles. Blume stated in a conference call that such measures should effectively raise operating profit above current levels rather than merely offsetting headwinds.
Focus on structural restructuring
To improve capacity utilization at its European plants, Blume appeared open to the idea of building Chinese models at local sites. 'We will examine whether there are sales opportunities for our Chinese cars in Europe,' Blume said. This could include proprietary models that VW developed specifically for the Chinese market and which are launching there this year. However, these are currently only potential options; nothing has been concretely planned or agreed upon.
Blume also sees opportunities in the defense sector - particularly for the Osnabrück plant. 'We are holding constructive talks with the defense industry,' Blume said, adding that these are already 'well advanced.' He expects a decision for Osnabrück by the end of the year.
Blume declined to comment on reports regarding talks with the Israeli defense group Rafael. CDU member of parliament Bastian Ernst had previously reported that discussions were taking place between Rafael and Volkswagen. According to reports, components for the 'Iron Dome' air defense system, which Rafael manufactures in Israel, could be produced in Osnabrück in the future.
Financial results decline
VW's operating profit fell by over 14 percent to 2.46 billion euros at the start of the year, while revenue decreased by 2.5 percent to 75.7 billion euros. On the bottom line, after-tax profit dropped by over 28 percent to 1.56 billion euros.
Further progress was made regarding the cash position. In the first quarter, net cash flow in the Automotive Division - excluding financial services - reached nearly 2 billion euros. A year earlier, there had been an outflow of 0.8 billion euros.
'Wars, geopolitical tensions, trade barriers, tightened regulation, and fierce competition are creating headwinds,' CEO Blume stated. US import tariffs alone cost the group an additional 0.6 billion euros.
Overall, VW is suffering from weak sales figures, particularly in China and the US. Globally, this pushed the group's delivery numbers for the January to March period down to just 2.05 million vehicles across all brands, a 4 percent decrease from a year earlier. Growth in Europe was unable to offset this decline.
According to CFO Antlitz, the environment has darkened further since the launch of the latest efficiency programs in 2024: 'Tariffs have been added, competition in China continues to intensify, and Chinese providers are increasingly exporting competitive pressure to Europe.' US tariffs alone 'burden us with approximately 4 billion euros in additional costs per year,' Antlitz noted.
The group's first-quarter results were also weighed down by weak figures from sports car manufacturer Porsche AG, which were released the previous evening. From January to March, after-tax profit there fell by nearly a quarter. The truck subsidiary Traton, with its MAN and Scania brands, had also previously reported a significant drop in profit due to high special items./men/fjo/mis/jha/
