ISTANBUL

 German auto giant Volkswagen Group reported a sharp 37% drop in operating profit in the first quarter of 2025, citing weakening demand in China, rising costs, and overcapacity at European factories, despite a modest uptick in sales revenue.

The group, which owns brands including Audi, Bugatti, Seat, Skoda, and Porsche, said sales revenue increased 2.8% year-on-year to €77.56 billion, driven by higher vehicle sales outside China.

However, operating profit slid to €2.87 billion, while net profit plunged 40.6% to €2.2 billion. Pre-tax profit also dropped 40% to €3.1 billion.

Volkswagen attributed the earnings decline to restructuring expenses, increased battery costs for electric vehicles, and declining sales in China, its largest market.

The challenges will arise in particular from an environment characterized by political uncertainty, increased trade restrictions and geopolitical tensions, raise competition, volatile commodity, energy and currency markets, and tighter requirements on emissions, VW said in a statement.

Despite the headwinds, vehicle deliveries rose 0.9% year-on-year to 2.1 million units in the January–March period.