Auto giant Volkswagen posts 14% drop in first-quarter profit, missing analyst expectations

Volkswagen reported a weaker-than-expected Q1 with operating profit of €2.5bn, down 14.3% year-on-year, citing higher U.S. tariffs, geopolitical tensions and intensifying competition from Chinese automakers. Revenue was €75.66bn (down 2.5%), and the profit result missed analyst consensus (~€4bn), weighing on the company’s shares, which are over 17% lower year-to-date. Management flagged risks from the Middle East crisis and outlined sweeping cost measures including ~50,000 job cuts in Germany and a product offensive to restore margins. VW projects operating return on sales of 4–5.5% for 2026 versus 2.8% in 2025. The combination of the earnings miss, tariff/regulatory headwinds and market-share pressure from China is likely to pressure German equities and the auto sector, suggesting downside risk for the Germany 40 index in the near term until profitability and competitive concerns ease.