The Volkswagen Group has started 2025 on the back foot, reporting a 41% plunge in net profit for the first quarter. The German automaker, whose portfolio of brands includes Audi, Bentley, Cupra, Lamborghini, SEAT, Skoda and Volkswagen, posted earnings of €2.19 billion ($2.35 billion), down from €3.71 billion ($4.2 billion) a year earlier, despite a modest rise in revenue.
Speaking during an earnings call on Wednesday, Volkswagen Group CFO Arno Antlitz points to a combination of high one-off charges and ongoing challenges in China as the key factors behind the decline. Group revenue rose nearly 3% to €77.6 billion ($83.2 billion), but this was offset by €1.1 billion ($1.18 billion) in “special costs”.
They charges included CO2-related provisions in Europe, restructuring expenses at the Wolfsburg-based company’s Cariad software division and fresh legal costs related to the long-running diesel emissions scandal.
The Volkswagen Group also confirms that profitability at its Chinese joint venture operations with First Automobile Works (FAW), Shanghai Automotive Industry Corp. (SAIC) and JAC Automobile (JAC) had again fallen sharply, compounding the profit squeeze. Losses also widened at its PowerCo battery division, although no detailed breakdown was provided.
Operating profit dropped 37% to €2.9 billion ($3.1 billion), down from €4.7 billion in Q1 2024. Still, Antlitz says the company is sticking with its full-year outlook issued earlier this year, though he acknowledges that potential tariffs under U.S. President Donald Trump’s trade agenda are not yet factored into the forecast.
“As expected, the Volkswagen Group started the year with mixed results,” says Antlitz. “Our vehicles are resonating strongly with customers. Incoming orders in Western Europe have risen significantly and our order books are filling fast.”
He adds that demand for the Volkswagen Group’s expanding range of electric models had improved across Western Europe but warns that the company must remain “focused on internal improvements” in a nod to the restructuring efforts at the Audi and Volkswagen brands.
“In a world of rapidly shifting conditions, we must concentrate on what we can control – a strong product portfolio supported by a competitive cost structure,” he says.
Volkswagen is making progress on its quest to cut fixed costs. Since initiating its cost-cutting drive in late 2023, the automaker has reduced its workforce in Germany by approximately 7,000 employees. This reduction is part of a broader plan to decrease the workforce by over 35,000 through early retirement and buyouts by 2030, aiming to save €1.5 billion ($1.7 billion) annually in labor costs. Volkswagen plans to reduce manufacturing capacity by 700,000 vehicles, translating to €4 billion ($4.5 billion) in annual savings. This includes ceasing production at the Dresden plant by the end of 2025 and ending T-Roc SUV production in Osnabrück by mid-2027.
