Tuesday, July 29, 2025 - Audi has revised its 2025 financial outlook downward, citing the impact of tariffs and restructuring expenses on profitability. The automaker now expects an operating margin between 5% and 7%, down from its previous forecast of 7% to 9%, following a sharp drop in first-half performance.
The company is grappling with headwinds in key markets,
including North America and China, where shipments declined in the first half
of the year. In China, European automakers are ceding ground to local
competitors such as BYD. Meanwhile, in the United States, tariffs are currently
set at 15% under a recent US-EU agreement that have raised costs and increased
complexity.
Audi is also evaluating the impact of these tariffs on its
operations in Mexico, where it manufactures the Q5 SUV—one of its top-selling
models in the United States. “The impact of the recently reached tariff
agreement between the United States and the EU is currently under evaluation,”
the company said in a statement. CFO Jürgen Rittersberger added during a call
that Audi is working to clarify final tariff levels for Mexico.
As part of a broader transformation effort, Audi is updating
its product lineup following several delays and cancellations in recent years.
While the company has introduced new electric models like the Q6 e-tron SUV,
their battery performance lags behind BMW’s upcoming Neue Klasse series. Audi
plans to launch 10 new plug-in hybrid models by year-end and is cutting jobs in
Germany.
“The days when Audi was seen as an innovation leader in the
automotive industry are behind it,” said Patrick Hummel, analyst, UBS. “Years
of outdated products have damaged the brand, and it remains to be seen whether
the new models will resonate with consumers and meet pricing expectations.”
Softening luxury demand in China and tariff challenges have
also accelerated Audi’s plans—already in motion—to shift some production to the
United States. Volkswagen Group CEO Oliver Blume recently stated that Audi
would "hit bottom this year before seeing positive momentum starting in
2026."
The new US-EU agreement establishes a 15% baseline tariff on
European car imports, down from the previous 27.5%, but still significantly
higher than the pre-Trump rate of 2.5%. Audi, which lacks US production facilities, is among the
manufacturers most exposed to the new tariff regime.
Volkswagen Group, Audi’s parent company, has lowered its
full-year guidance after absorbing a US$1.5 billion tariff hit in the first
half of 2025. Audi’s own performance during that period was weighed down by US
tariffs and restructuring costs. Revenue rose 5.3% year-over-year to €32.6
billion, with operating profit at €1.1 billion and net cash flow at €0.9
billion.
The Audi Group delivered around 794,000 vehicles globally in
the first half, a drop of nearly 6%, though fully electric vehicle deliveries
surged 32%. “The situation remains highly challenging,” said CFO Rittersberger,
citing tariff pressures, restructuring efforts, and weaker demand amid
uncertainty over EV incentives.
Earlier this year, Audi reached an agreement with labor
representatives to reduce its workforce by up to 7,500 positions over the
coming years as part of its restructuring strategy. The plan also includes
initiatives to enhance productivity, speed, and flexibility at its German
plants. Audi aims to generate annual savings of over €1 billion (US$1.17
billion) through these efforts.
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