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(Bloomberg) — Volkswagen AG expects returns to remain under pressure this year as higher raw material costs, intense competition and geopolitical tensions combine for a challenging outlook.
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Europe’s largest automaker sees an operating return in a range of 4% to 5.5%, VW said Tuesday. The company will focus on cost cuts and reducing complexity this year, with divergent regulations targeting lower emissions adding to its burden.
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Current operating margins aren’t sufficient in the long-run, Chief Financial Officer Arno Antlitz said in a statement, adding the manufacturer will continue to restructure while targeting more sales in the US.
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The company proposed a dividend of €5.26 ($6.12) a share for 2025, a decline of 17%.
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VW is fighting back against a fast-moving competition in China, still VW’s biggest market, and soft demand in Europe where the shift to EVs remains volatile. The US-Israeli war is also raising risks on supply-chain disruption and that consumers delay spending.
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Energy and fuel prices have surged since the start of the conflict, stoking inflationary fears. Freight rates have also started to rise. Continental AG, one of the world’s largest tiremakers, warned last week of a negative impact on sales and earnings because of higher costs of oil-derived materials and logistics.
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For last year, VW’s operating profit more than halved after the Porsche brand walked back costly plans on electric vehicles and US tariffs weighed.
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Adjusted operating profit fell 54% to €8.9 billion during 2025. Charges and writedowns at Porsche led the drop with the 911-maker’s margins almost flat.
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VW in January already reported higher-than-expected automotive cash flow for last year, after delaying several projects and investments as part of an overhauled EV strategy. Carmakers across the industry have cut back on aggressive battery-car rollouts, after demand trailed expectations.
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(Updates with CFO comment in third, dividend proposal in fourth paragraph)
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