The CEO of Volkswagen Group, Oliver Blume, has issued a stark warning regarding the company’s future investments in the United States. In a recent interview, he quantified the annual financial damage from US import tariffs at a staggering five billion euros. Blume stated unequivocally that without financial compensation from Washington, major new US investments are off the table.
This declaration comes at a challenging time for the automotive giant. The company’s operational earnings for 2025 stood at 8.9 billion euros, representing a steep 53% decline from the previous year. This performance was weighed down by special charges totaling 8.8 billion euros, which included 4.7 billion euros related to Porsche and 2.9 billion euros in tariff costs.
Tariffs Disrupt North American Operations
The core of the issue lies in Volkswagen’s production footprint. Models like the Jetta and Tiguan, manufactured at the plant in Puebla, Mexico, are now subject to 25% import duties effective April 2025. This has directly led to a 10% drop in North American deliveries—a decline Blume attributes not to weak demand, but to a business calculation that no longer works. Vehicles such as the ID.4 and the Atlas, built at the Chattanooga, Tennessee facility, remain tariff-free. However, these US-made models accounted for only about one-third of stateside sales recently, an insufficient volume to offset the financial burden from Mexican production.
Conditional Growth Projects
Future expansion plans are now explicitly contingent on tariff relief. The Scout project, slated for US production starting in 2028, carries additional costs of 1.2 billion euros, of which 900 million have already been compensated. Similarly, Blume indicated that a potential Audi manufacturing plant in the US is only under consideration if the tariff pressure eases.
Blume also highlighted what he sees as an imbalance in transatlantic trade relations. European manufacturers face a 15% tariff on exports to the US, while American cars imported into Europe are taxed at 10%, with a perspective of moving to 0%. “This deal is asymmetrical and distorts competition,” the CEO remarked.
Financial Outlook and Shareholder Implications
For the current year, 2026, Volkswagen forecasts an operating return on sales of between 4.0% and 5.5%, an improvement from the meager 2.8% achieved in the prior year. The company explicitly notes that this guidance is only valid as long as the current tariff rates are not increased further.
These pressing issues are expected to take center stage at the Annual General Meeting scheduled for June 18, 2026. The company has announced an ordinary dividend of 5.20 euros per share. Reflecting the ongoing uncertainty, Volkswagen’s share price has declined by approximately 16% since the start of the year, trading significantly below its 52-week high of 108.30 euros.