Volkswagen (VOW.F) shares fell early Friday morning after the German carmaker reported a decline in first-half profit and lowered its full-year revenue forecast, citing a challenging business environment.
Attributable earnings for the six months ended June 30 dropped to 2.57 billion euros from 4.01 billion euros earlier, while sales revenue inched down to 158.10 billion euros from 158.36 billion euros.
The owner of the Porsche and Audi brands lowered its 2026 sales revenue growth forecast to a range of -3% to flat from its previous guidance of flat to 3%. The revised outlook assumes that the current international trade tariff environment remains unchanged, and excludes the potential impact of further escalation in the Middle East, which the company said cannot be reliably assessed at this time.
The stock was down more than 3% in early morning trading in Frankfurt.
In addition to the tariffs and geopolitical uncertainty, the company cited "increasing competitive intensity, volatile commodity, energy and foreign exchange markets, as well as changing requirements resulting from emissions-related regulations" as key challenges for the auto industry.
"The environment for the automotive industry remains extremely challenging: geopolitical crises, trade conflicts, high regulatory requirements, volatile markets and intensified competition," Chief Executive Oliver Blume said.
To offset the tariff-related challenges and intensifying competition from Chinese carmakers, Volkswagen is preparing an extensive overhaul of its business. Blume recently said the company might need to double its planned layoffs to 100,000 positions in order to bring down overhead costs.
In the earnings release, Blume emphasized the importance of the group's realignment. "Therefore we need to significantly reduce complexity - in our product portfolio and platforms, in our equity portfolio, as well as in our leadership and decision-making structures."
