(Bloomberg) — Volkswagen AG expects profitability to remain roughly flat this year as the German automaker contends with muted demand in Europe and worsening trade conflicts.
The manufacturer is projecting an operating margin of 5.5% to 6.5% in 2025, compared with 5.9% last year, it said Tuesday. The company sees revenue increasing by as much as 5%.
Volkswagen is bracing for another tricky year as rising trade tensions risk hurting car sales. The group is highly exposed to planned US tariffs on Mexico and Canada, while the threat of duties on European cars puts export-dependent Porsche at risk as well.
The outlook reflects “the global economic challenges and the profound changes” affecting the auto industry, said Chief Financial Officer Arno Antlitz.
The European Union this month granted automakers more time to hit stricter pollution targets — allowing VW to sell more of its profitable gasoline cars this year — but overall sales in the region remain lackluster as customers feel the squeeze from higher living costs.
The company is also under pressure to stabilize its performance in China, where it has been shedding market share to local manufacturers led by BYD Co. that shifted to electric models faster.
In Europe, Chief Executive Officer Oliver Blume is targeting cost cuts at Porsche and Audi and has struck a deal with unions to restructure the group’s namesake brand. VW is planning several budget EVs to woo Europe’s squeezed consumers, but those won’t start arriving until next year.
(Updates with information on EU emissions targets in fifth paragraph.)
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