WOLFSBURG, Germany — Volkswagen lowered its outlook Friday, warning that revenue could decline by as much as 3% this year as tariffs, weak demand in China and intensifying competition from lower-cost electric vehicle makers continue to pressure the world’s second-largest automaker.

The company said second-quarter operating profit fell 9.5% to €3.5 billion, reflecting higher costs, pricing pressure and weaker vehicle sales in key international markets. Management also acknowledged that restructuring efforts across its European operations are accelerating as the company works to reduce costs and improve competitiveness.

For businesses across the automotive supply chain, Volkswagen’s warning is another sign that the industry’s transformation is far from over. Parts suppliers, logistics companies, dealerships and manufacturers that depend on Europe’s largest automaker could face continued pressure if production slows further or additional cost-cutting measures are introduced.

The company is also battling an increasingly competitive Chinese market, where domestic manufacturers continue to gain market share through lower-priced electric vehicles. At the same time, higher tariffs and trade uncertainty are adding costs across global manufacturing and distribution networks.

Investors are closely watching whether Volkswagen can improve margins while continuing to invest billions of dollars in electric vehicles, software and next-generation manufacturing. The results underscore a broader challenge facing the global auto industry: balancing long-term investment in new technologies while preserving profitability in an increasingly competitive market.

Volkswagen said it expects restructuring efforts and continued cost controls to remain a major priority during the second half of the year as it navigates a slower global automotive market.

JBizNews Desk | Wall Street

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