Audi's Profit Plummets in First Half of the Year, Lowers Full-Year Forecast

On July 28, Audi, the luxury car manufacturer under Volkswagen, announced its half-year financial report. Due to the impact of tariffs, Audi (which also includes brands such as Bentley, Lamborghini, and motorcycle manufacturer Ducati) experienced a significant decline in profitability in the first half of the year.

In the first half of this year, Audi delivered approximately 794,000 vehicles, representing a year-on-year decrease of nearly 6%. In contrast, deliveries of Audi’s pure electric vehicles achieved strong growth of 32%, totaling 101,000 units. Revenue reached about 32.6 billion euros, up 5.3% compared to the same period last year, mainly benefiting from the increased deliveries of pure electric models. Operating profit was approximately 1.087 billion euros, compared to 1.982 billion euros in the same period last year, a significant year-on-year decline of 45%. The operating profit margin was 3.3%, much lower than the 6.4% recorded in the same period last year. After-tax profit was 1.346 billion euros, compared to 2.154 billion euros in the same period last year, a sharp decrease of 37.5% year-on-year. Net cash flow was 900 million euros, compared with 1.1 billion euros in the same period last year.

Image source: Audi

In light of the financial performance in the second quarter, the increase in U.S. import tariffs, and the impact of restructuring expenses, Audi has lowered its performance forecast for 2025.

The company currently expects this year's revenue to be between 65 billion euros (approximately 76 billion US dollars) and 70 billion euros, lower than the previously expected range of 67.5 billion to 72.5 billion euros. The operating profit margin is expected to be between 5% and 7%, lower than the previously expected range of 7% to 9%.

In the first half of the year, Audi's sales declined in most major markets, including North America and its former profit engine, China. The company is currently accelerating the innovation of its product lineup. In the Chinese market, as domestic automakers led by BYD launch intense competition, European car manufacturers are continuously losing market share. In the U.S. market, following the agreement reached between Trump and the EU on July 27, the current 15% tariff has increased companies' costs and operational complexities.

Audi stated in a statement: "We are currently assessing the impact of the latest tariff agreement reached between the United States and the European Union." The group's Chief Financial Officer Jürgen Rittersberger said during an analyst conference call that the company is also intensifying its evaluation of the final tariff levels in Mexico. The Q5 SUV produced by Audi in Mexico is a best-selling model for the brand in the U.S. market.

In the past few years, Audi has repeatedly announced plans to launch new models to better compete with Tesla, but several of these models have ultimately been canceled or delayed. The brand has launched new electric models, including the Q6 e-tron all-electric SUV, but its battery performance is inferior to BMW's Neue Klasse series, which is set to debut in September. Audi plans to introduce 10 new plug-in hybrid models by the end of this year.

UBS analyst Patrick Hummel stated before Audi's financial report release: "The era when Audi was regarded as an innovation leader in the automotive industry is over. Years of lackluster products have put the company in a difficult position, and whether its newly launched products can truly appeal to consumers and achieve reasonable pricing remains to be seen."

The decline in demand for luxury cars in China and the pressure from U.S. tariffs have prompted Audi to accelerate its decision-making process for building a factory in the United States. This plan was initiated before Trump was elected, and the brand will make a final decision by the end of this year.

Volkswagen CEO Oliver Blume stated last week that Audi's performance may bottom out this year, but will gain "positive momentum" starting from 2026.