Volkswagen Group Q1 Profits Drop 14% Amid Plans for Full Restructuring to Tackle Tariffs and Weak Demand

Volkswagen Group reported its first-quarter 2024 results, with operating profit declining 14% year-over-year to €2.5 billion and revenue falling 2.5% to €75.7 billion—below the market expectation of €77.6 billion. The operating profit margin stood at 3.3%. The company stated it is facing significant challenges due to high U.S. tariffs, geopolitical disruptions, and weak global automotive demand. The U.S. tariffs alone are expected to add approximately €4 billion in annual costs, while sales continue to decline in both the U.S. and Chinese markets. Management acknowledged that current cost-cutting measures are insufficient and announced plans for further actions to maintain competitiveness. CEO Oliver Blume said the company will conduct a comprehensive review of its operations, including underutilized plants, an overly complex model lineup, and an excessively broad portfolio of businesses. Since 2023, Volkswagen has already reduced its annual production capacity in China by around 1.5 million vehicles and lowered its long-term sales targets. The company forecasts an operating profit margin of 2.8% for 2025, aiming to increase it to between 4% and 5.5% by 2026.