By Scott D Brandon, April 30, 2025
Volkswagen Group’s 40 percent plunge in first-quarter earnings is not just a corporate stumble—it is a symptom of a deeper malaise. The German automaker, long a titan of industrial capitalism, saw pre-tax earnings fall to €3.1 billion from €5.1 billion a year ago. Its operating margin has withered to 3.7 percent, down from 6 percent, as the cost of maintaining the machinery of empire—factories, supply chains, global reach—rises faster than the markets it depends on can bear.
VW is being squeezed by spiralling manufacturing costs, bloated capacity in Europe, and faltering demand in China, once its golden goose. At the same time, the spectre of U.S. tariffs looms large, a product of the unravelling post-war global order and the rise of economic nationalism. These trade wars are not anomalies; they are harbingers of a world turning inward, fragmenting, retreating from the myths of endless growth and global harmony.
Even as the company clings to an optimistic sales outlook, it quietly concedes its profit margins will likely scrape the lower end of its already reduced target. Its crown jewel, Porsche, has slashed profit projections amid sluggish electric vehicle sales and the chaotic churn of tariffs imposed by a U.S. president treating trade as spectacle.
Other automakers—Mercedes-Benz, Volvo, General Motors—have joined VW in abandoning their forecasts altogether, unable to see through the thick fog of geopolitical instability and economic dislocation.
An executive order signed by President Trump, aimed at muting the blow of his own tariffs, may offer a temporary reprieve. But such gestures are bandages on a system in decline. The global auto industry is straining under the weight of its contradictions: overproduction, declining demand, and the crumbling of the very trade alliances that once fueled its rise.
This is not merely a bad quarter. It is a warning.