Decline in Volkswagen's Shares follow Profit Decline
In a challenging economic landscape marked by trade-related uncertainties and sluggish demand, German automotive giants Volkswagen, Traton (Volkswagen's truck and bus division), and Puma have reported significant profit declines in 2025.
Traton, in particular, saw a 6% decrease in sales revenue in the first half of 2025 to €21.9 billion, with unit sales down by 4%. The company's operating margins dropped from 9.1% in 2024 to 6.3% in the first half of 2025.
The primary drivers behind this profit decline include trade tariffs and protectionism, market uncertainties, lower capacity utilization, and adverse currency effects. Trump's tariffs, such as a 27.5% duty imposed on some goods, have significantly affected these companies, increasing costs and leading to lost production and lower competitiveness in the U.S. market.
Brazil's economic troubles, the slow recovery in Europe, and uneven demand in China have further complicated the situation. Currency fluctuations, like the Swedish krona appreciation, have also negatively affected Traton's results.
Puma, under the Volkswagen umbrella, has also been affected, reversing its profit outlook from a forecast of €445–525 million profit to expecting an operating loss. The company attributes this mainly to dampened U.S. sales caused by tariffs and market conditions.
Volkswagen has also issued a profit warning for the full year, significantly lowering its expectation for the group's operating profit margin. The company's profit after tax decreased by 36% in the second quarter, and Puma suffered a significant drop in sales in the same period.
The stock market has responded accordingly. Traton shares fell sharply after the company revised down its full-year outlook, reflecting investor concerns about the difficult trading environment and uncertain growth prospects amid tariff pressures and geopolitical frictions. Volkswagen's stock was notably impacted due to these challenges faced by its truck division and subsidiaries, weighing on overall group profitability and investor sentiment.
However, it's not all bad news. Analysts at JP Morgan maintain a "Neutral" rating on the Deutsche Börse share with a price target of 247 euros. Volkswagen's preferred shares listed on the DAX initially fell by around 3% but recovered and were up 3.6% at midday. Porsche SE's preferred shares initially fell by around 2%, but then turned positive, up 2.3% at midday.
Despite these challenges, the outlook for these companies remains uncertain, with the ongoing trade tensions, market uncertainties, and geopolitical frictions continuing to pose risks.
References: 1. Traton reports H1 results, lowers full-year outlook 2. Traton shares plummet after profit warning 3. Puma slashes profit outlook, blames tariffs and market conditions 4. Volkswagen issues profit warning, blames Trump's tariffs
The financial industry expects these economic challenges, including trade tariffs, uncertainties in the market, and geopolitical frictions, to impact the automotive sector as Traton and Puma, both subsidiaries of Volkswagen, have reported significant profit declines. Additionally, the transportation and finance sectors could be affected as trade-related uncertainties continue to create hurdles for industries reliant on international trade, such as automotive manufacturing.
