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Volkswagen skids into the red on 5-billion-euro US tariff hit, Porsche woes
The logo of the German car manufacturer Volkswagen can be seen on a vehicle in front of a VW dealership.
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An expensive course correction at subsidiary Porsche dealt Volkswagen a hefty blow in the third quarter, resulting in a 1.3-billion-euro ($1.52 billion) operating loss and piling billions more in costs on top of pressure from U.S. tariffs.
Volkswagen booked 4.7 billion euros in charges due to Porsche’s strategy reversal on electric vehicles in the first nine months, while U.S. import tariffs were expected to cost Europe’s biggest carmaker up to 5 billion euros this year, the company said on Thursday.
“Those effects will continue to persist – and that is why we must rigorously implement the performance programs in place, push forward efficiency measures and develop new approaches,” CFO Arno Antlitz said in a statement.
He referred to a “mixed picture” so far this year, pointing to strong demand for Volkswagen’s electric cars in Europe and restructuring progress but pressure on margins from the shift to electric.
Volkswagen’s operating loss in the third quarter was down from a 2.8-billion-euro operating profit for the group a year earlier but less severe than the 1.7-billion-euro loss forecast by analysts in a poll by Visible Alpha.
Shares in Volkswagen were seen 1.2% higher in early Frankfurt trade following the quarterly earnings release.
Porsche, 75.4%-owned by Volkswagen, also slid deep into the red in the third quarter as it delays an electric vehicle rollout in a bid to win back consumers with hybrids and combustion engines.
Volkswagen CEO Oliver Blume also serves as CEO of Porsche but will hand over the reins there at the turn of the year, keeping his job at the helm of the parent company only.
Investors had increasingly called into question his ability to lead the two companies simultaneously at a time of major challenges for both.
Volkswagen maintained its full-year guidance on Thursday but said this was based on the assumption of an adequate supply of chips, hinting at the carmaker’s next battlefront as a trade stand-off over Dutch chipmaker Nexperia threatens production stoppages in the automotive industry.
