In the first quarter of 2025, Porsche and Volvo Cars reported significant profit declines, largely attributed to the impact of new U.S. tariffs imposed by President Donald Trump. The automotive industry has been destabilized by a 25% duty on foreign-made car imports, excluding Mexico and Canada, and an upcoming similar levy on auto parts. This uncertainty has forced companies to adopt cost-cutting measures to maintain cash flow.
Porsche’s operating profit dropped 40% to €762 million, affected by tariffs, declining Chinese sales, and setbacks in its electric vehicle pivot. The company also reduced its full-year sales margin forecast and canceled an expansion at its EV battery firm, Cellforce, leading to increased special expenses.
Volvo Cars saw a 59% plunge in operating profit to SKr1.9 billion and responded by launching a SKr18 billion cost-cutting initiative while suspending its previous earnings guidance.
CEO Håkan Samuelsson emphasized the need to safeguard cash generation during turbulent times, with job cuts anticipated. Both companies suffered stock price declines following these announcements, underscoring the significant strain on the global auto industry from ongoing trade tensions.
via FT