ISTANBUL

German auto giant Volkswagen on Friday reported a 29% year-on-year drop in operating profits in the second quarter of the year as costs rose due to US tariffs, according to the firm's financial results.

Europe’s biggest car manufacturer saw an operating profit of €3.83 billion ($4.49 billion) in April-June, down from €5.4 billion a year ago.

The firm's revenues also fell 3% year-on-year in the same period to €80.8 billion.

Both figures were below market expectations for the second quarter of the year.

Volkswagen said in a statement that its 2025 operating return on sales is expected to range around 4%-5%, down from a previous forecast of 5.5%-6.5%.

The financial results followed fierce competition from Chinese auto brands and US auto tariffs of 25%.

US President Donald Trump also announced earlier this month that imports from the EU will face a 30% tariff as of Aug. 1.

Arno Antlitz, Volkswagen's chief financial officer, said the company's increase in electric vehicle (EV) sales had a negative impact on profits, as EV margins are lower than those of internal combustion engine vehicles.

Apart from that, Antlitz claimed that one-offs like the effects of US tariffs and restructuring measures cost roughly €2 billion in total.

Volkswagen said there is "high uncertainty" over trade policy and that it is expected that high US levies would remain in effect for the second half of the year