Volkswagen Group has reported a €1 billion loss for the third quarter of 2025, hit hard by rising U.S. tariffs and mounting problems at its luxury subsidiary, Porsche AG, which has struggled with weak demand in key markets and costly reversals in its electric vehicle strategy.
According to reports from Reuters, The Financial Times, and El País, this marks Volkswagen’s first quarterly loss since the pandemic, highlighting the deep financial strain facing Europe’s largest automaker as global trade tensions and shifting consumer trends reshape the car industry.
“It’s a mixed picture. We are taking decisive measures to improve efficiency and restore profitability,” said Volkswagen CEO Oliver Blume, who also heads Porsche.
Tariffs and restructuring weigh heavily
Volkswagen disclosed that U.S. import tariffs could cost the group up to €5 billion this year, while the fallout from Porsche’s internal restructuring and EV strategy changes led to €4.7 billion in charges over the first nine months of 2025.
Porsche, which once delivered record profits, has plunged into the red with a €966 million quarterly loss—its first since the company went public in 2022. Analysts attribute the downturn to weaker Chinese demand, declining luxury car sales, and supply chain complications intensified by global trade policies.
“Porsche’s crisis has become a drag on Volkswagen’s broader performance,” noted El País, reporting that the sports car maker’s heavy investment in electric models was scaled back after disappointing sales figures.
Wider industry implications
Volkswagen’s losses come amid mounting challenges for the European auto industry, including sluggish EV adoption, higher production costs, and geopolitical pressures that have disrupted supply lines.
The group’s financial strain reflects a growing divide in the market: while Asian automakers continue to gain ground, European firms face declining competitiveness in the United States and China.
Volkswagen said it remains committed to its electrification plans but will adopt a more “measured approach” going forward. It reaffirmed its full-year guidance but warned that the tariff burden and market volatility could affect future earnings.
“We expect a gradual recovery in 2026 as cost-control measures and market diversification take effect,” a company spokesperson told Reuters.
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