The Car Crisis Deepens: Tariffs and Weak Demand Punish European Carmakers

European car manufacturers are facing a worsening financial situation as U.S. tariffs, falling demand, and fierce Chinese competition trigger a wave of profit warnings and revised forecasts.

Volkswagen Reports Heavy Losses

Volkswagen saw a 36% drop in net profit in the first half of 2025, with tariffs costing the group €1.3 billion and forcing it to cut growth forecasts for the year.

Stellantis Braces for Billions in Losses

Stellantis, which owns brands such as Fiat, Peugeot and Opel, has forecast losses of €2.3 billion in the first half of the year due to falling North American sales and U.S. tariffs.

Renault Also Cuts Its Forecast

Renault lowered its expected operating margin and free cash flow for 2025 as sales volumes declined and its investment in Nissan dragged on results.

Porsche Feels the Squeeze

Porsche reduced its revenue and profit margin outlook earlier this year and is now preparing further cost-cutting measures to offset the impact of tariffs.

Chinese Brands Increase Market Pressure

Affordable, tech-heavy Chinese electric vehicles are winning market share in Europe, intensifying competition for traditional manufacturers.

A Sector Under Financial Strain

Flat or declining revenues and shrinking profit margins are becoming common across Europe’s biggest carmakers, according to industry analysts.

Carmakers Suspend Future Projections

Both Stellantis and Mercedes-Benz have paused their financial projections for 2025 as tariff policies and falling demand create uncertainty.

Calls for a European Plan

Analysts warn that the EU needs a coordinated response to trade tensions and EV market shifts to prevent long-term damage to the automotive industry.

Uncertain Months Ahead

With weak demand, rising costs, and unpredictable U.S. trade policies, 2025 could prove to be one of the toughest years for European carmakers in over a decade.