Volkswagen:Quarterly Results/2025 Q2

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Q2 2025 earnings call summary

Q2 2025 Webcast Call | Q2 2025 Earnings Call Transcript

Q2 2025 results

US tariffs and restructuring costs burdened Audi operating profit in H1 2025 by EUR 750 million. Audi achieved operating return on sales of 3.3% in H1 2025. Excluding the US tariffs and restructuring costs, operating return on sale would have been 6.1%.
Financial Services developed positively in H1 2025 due to an increase in contract volumes by 10%, particularly in Europe and stable credit loss ratio.

2025 outlook

Second half of the year will be supported by continuation of product momentum and renewed product portfolio.
Ongoing restructuring and efficiency programs are also expected to continue paying off.
Increasing BEV share will continue being a headwind.
Outlook will also be impacted by the US tariffs.
At 27.5% tariff level, a headwind of 200 basis points is guided before any mitigation measures (e.g. price increases).
At 10% tariff level, a headwind of 60 basis points is guided before any mitigation measures.
Antlitz said if we end up at 15% tariff for both EU and Mexico, then we would end up at the middle of the guidance (Q&A).
Antlitz cautioned that the longer we go into the second half of the year, the more we tend to move towards the lower end of the guidance (Q&A).
Antlitz said they expect to touch the bottom this year in Audi and Porsche, with positive momentum from 2026 onwards (Q&A).
Antlitz said they expect cash flow tailwind in the second half of the year due to seasonality surrounding production (Q&A).
Q2 was a peak for the Volkswagen brand core when it comes to operating margin due to slight positive effect from China and Q3 being impacted by summer production shutdowns. But they are on good tract to achieve the 4% target for 2025 (Q&A).
Antlitz said second half underlying operating profit is expected to be roughly on par with the first half (EUR 9 billion) (Q&A).
Antlitz said they will reflect yesterday's Traton updated guidance (Traton lowered operating profit margin guidance for 2025 to a range between 6% to 7% from 7.5% to 8.5% previously) on their 4% to 5% operating return on sales guidance.

Products

Oliver Blume said their model offensive is making great progress.
Blume said they are continuing the most extensive product offensive in the group history in 2025.
Blume said BEV share in western Europe doubled to around 20% compared to the previous year.
Blume said 4 of the 6 best selling BEVs in Europe currently comes from Volkswagen Group and they have a BEV share of 28%.
Blume said they are receiving positive feedback from customers on design, technical performance and software features.
Blume said BEV order intake is up 62%.
Blume said their order backlog grew to 925,000 and extends to Q4.
Blume said they expect additional order intake momentum since numerous models are coming to the market next month.
Antlitz said Powerco is expected to start production at the end of the year.
Antlitz said Audi developed a completely new design and tech (Q&A).

Restructuring program

Blume pointed out that the results indicate their measures are beginning to take effect but causing high expenses.
Blume said more than 4,000 employees have left the company since the start of the year.
In the medium term, Audi expects annual savings of EUR 1 billion by cutting workforce by 7,500.
Antlitz said since the end of 2023, they have reduced workforce by around 9,000 at the Volkswagen AG. Overall, the number of employees at the Group has been reduced by 10,600 since the start of the year.
Expect to dispose some non-controlling interests. Benefits of this is not expected this year (Q&A).
Audi restructuring (7,500 job cuts) is slightly behind on schedule but benefits will kick in in the coming quarters (Q&A).
First signs of product cost reduction are being seen in Germany, not the magnitude planned but significant progress (Q&A).

Tariffs

Blume said if the current US tariffs stay in place, the burden would increase to several billions (from EUR 1.3 billion in H1 2025).
Antlitz said they are expecting a deal between US and Europe of around 15% (Q&A).
Antlitz said he thinks Volkswagen's investment package in the US is attractive to the US government, hence they are expecting additional deal between US and Volkswagen (Q&A).

Competition

Antlitz said they see a positive trend in Europe (Q&A).
Antlitz pointed out that they were able to improve their overall market share in Europe to 25%.
Antlitz said they see a very stable pricing environment for ICEs but that may also be due to product offensive (Q&A). Pricing effect was minus EUR 500 million, better than originally thought and due to ramp up of BEVs.

China

Blume reiterated that their newly developed China architecture is state of the art and comes with Level 2 ADAS.
Blume said they will bring 30 new models by 2027 and 50 by 2030.
Blume said they have managed to reduce material cost by 40% and target reduction to 10%.
Blume said they received positive feedback when they presented their new Chinese models at Shanghai Auto Show (Q&A).
Blume highlighted their unique selling points in China which include strong dealer and service networks and great customer base which a lot of their rivals don't have (Q&A).

Autonomous driving

Blume said with ID.Bus AD, they are making strides on autonomous driving.
They plan to bring it to the US market in 2026 through a partnership with Uber.
Blume said their software meets key regulatory requirements for level 4 vehicles.
Robotaxi market is forecasted to reach $400 billion annually by 2030.
Blume said compared to competition (Tesla and Waymo), they are in good position since they have advanced technology and the needed platforms (Q&A).
Blume said they have a lot of interest from many cities in Europe and Middle East, which are ready to implement their solution.
Blume pointed out that around 50% of Tesla market cap is tied to Robotaxi, hence Volkswagen Group market cap could also get a boost from it (Q&A).

CO2 regulation

They are providing incentives to boost BEV share so as to meet the EU CO2 regulation. However, the positive feedback, they are getting on products enable them to be restrictive on discounts and incentives (Q&A).

Management and analysts' estimates

Management guidance

Management guided 2025 revenue of EUR 340.89 billion (+5% y/y) and operating return on sales in the range of 5.5% and 6.5%. This doesn't include the impact of US trade tariffs.
It expects automotive net cash flow for 2025 to come in between EUR 2.0 and EUR 5.0 billion.
It's guiding net liquidity in the automotive division for 2025 of between EUR 34 and EUR 37 billion.
The guidance is largely expected to trend towards the lower-point of the range due to developments in the period up to April 28, 2025.

Analysts' estimates at Marketscreener

Key Items^[1]	Q2 2025	Y/Y	Q3 2025	Y/Y	2025	Y/Y
Revenue	EUR 82.12 billion	-1.5%	EUR 76.581 billion	-2.45%	EUR 325.75 billion	0.34%
Operating return on sales	4.53%		4.76%		4.76%
Earnings attributable to Volkswagen AG shareholders	EUR 2.030 billion	-34.8%	EUR 2.566 billion	11.89%	EUR 9.45 billion	-11.86%
Diluted EPS	EUR 4.05		EUR 5.12		EUR 18.82

Volkswagen Pre-earnings Analysts opinions

US tariffs

Neutral; €84->€92, UBS said the US tariffs are likely to have had less severe impact on European automakers in Q2 than initially feared. It raised its 2025 global light vehicle production (LVP) projection by 3% to 90.4 million units and its 2026 forecast by 2% to 90.9 million, citing improved volume trends in China and US due to reduced impact of the tariffs.
Buy (preference shares), €139: Warburg Research said Volkswagen is one of the companies they expect to issue profit warning once the White House announces tariffs on the EU in July.
Buy, €139-> €146: Analyst Fabio Hölscher of Warburg Research said the last three months are likely to have been dominated by tariffs and special effects.

Analysts Split on VW Q2 2025 outcome

Neutral, €110: Analyst Jose Asumendi of JPMorgan said based on preliminary information from Volkswagen, he expects Q2 2025 revenue of €82 billion and margin of around 4.5%.
Sector Perform, €112: Analyst Tom Narayan of RBC said market expectations for Q2 and full year 2025 appear reasonable.
Buy, €125: Analyst Tim Rokossa of Deutsche Bank expects Volkswagen to have performed solidly in Q2 2025.

Buy, €130 to €125: Analyst Philippe Houchois of Jefferies said the delivery numbers highlighted the discrepancy between improving mass market sales and declining premium brand sales. Houchois said he lowered 2025 EBIT by 11% to €14 billion. He added that there's lack of reliable consensus and targets.

China

Neutral; €110: JPMorgan said their discussions with Ralf Brandstätter, head of Volkswagen Group China signaled that Volkswagen is making clear progress in China with numerous local collaborations. They pointed out that this could accelerate Volkswagen's stabilization of market share in China.

Porsche Analysts opinions

According to UBS, Porsche indicated that Q2 operating profit would be around break-even due to €500 charges related to Cellforce battery joint venture write-down and €200 million restructuring costs . It forecasts that Porsche will report operating profit of €30 million for Q2 and adjusted margin of 8.2%.
UBS is skeptical that Porsche can return to double margins without a tariff resolution. It pointed out that after the launch of the new 911 Turbo at the end of 2025, there is no major ICE or hybrid introduction until 2028 and investments in the e-vehicle remain high.
Jefferies pointed out that Porsche's current operating margin guidance of 6.5% to 8.5% for 2025 only factors in two months of US tariffs, hence it's too high.

Q2 2025 Porsche Earnings Call Insights

Q2 2025 Porsche Earnings Call Transcript

China

“We deliberately cut production and reduced volumes to protect our brand, to protect our price premiums.” — Breckner

“We’ve launched a few special models with the Cayenne, also with the Macan... better proposition to the customers... still very well positioned above everything that you see in the competition.” — Breckner
“We have reduced our footprint from around 150 dealerships to about 100 by 2027.” — Blume
“We don’t expect that we will come back to 100,000 or over 100,000 [units]... We are calculating around 40,000 to 50,000 units in China.” — Blume
“We are counting more than in other regions of the world for exclusivity... installing city showrooms.” — Blume
“We are volume-wise down at a level of probably a bit more than 40,000 units this year... That’s a level we also see for the years to come.” — Breckner

Tariffs

“Extraordinary expenses... approximately €1.1B, of which around €500M [battery impairments] and around €400M from U.S. import tariffs.” — Breckner
“We had, as communicated, €400M in Q2... full 27.5%... as of August 1, we expect tariffs to come down to 15%.” — Breckner
"When we talked about mid to high three digit numbers there, a mid number would be €500 a high number would be $999,000,000 So mid to high is well in between these numbers and that's our estimation of the net effect for the full year, giving the assumptions I've just mentioned, especially that we will see the 15% as of August 1."
“We’ve already implemented pricing measures in early June with 2.3% to 3.6% of additional price increases.” — Breckner

“Mid to high triple digit [million euro] net effect for the full year.” — Breckner
“We will continue now with the talks [with the U.S. government]... There could be an opportunity that we will get a special bonus... not connected to the tariffs.” — Blume

Demand

“Incoming orders remain robust, reflecting strong brand desirability and a favorable product mix.” — Breckner

Guidance

Revenue in the range of €37B and €38B.
Group Return on Sales of between 5% and 7%.
“2025 will be the trough... 2026 will be a better year... too early to say whether double digit [margin] or not next year.” — Breckner
“On an operational level, we are running... well above [Q2’s 2.6%] return of sales level.” — Breckner

Restructuring

“We will not extend around 2,000 fixed term contracts... reduce an additional 1,900 positions... mainly R&D and SG&A.” “That’s ~15% of the core business workforce.” — Breckner
“The second structural package... needs to be a big one, a decisive one... negotiations start after the summer break.” — Breckner

Launch roadmap

“Now we are continuing this year with the 911 Turbo S, the next year with the electric Cayenne followed by the electric 718 and much more in the row.” — Blume

“We won’t be later than 2028 with a B SUV ICE and hybrid version... We are speeding up the process there.” — Blume

References

↑ https://www.marketscreener.com/quote/stock/VOLKSWAGEN-AG-436737/finances/

[1] ttps://www.marketscreener.com/quote/stock/VOLKSWAGEN-AG-436737/finances/

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