Volkwagen unveils strategy: "Permanent changes cannot be ruled out"
Volkswagen is in discussions with the U.S. government for a special deal that could potentially waive tariffs on its investments in the country. The proposed deal, which includes investments in the new US brand Scout, software projects with Rivian, and commitments for Volkswagen and Audi, is still under negotiation and has not been finalized as of early August 2025.
The broader EU-U.S. trade talks are progressing, with the aim of reducing U.S. car import tariffs from 25% to 15%. This potential reduction, while welcomed by Volkswagen and other European automakers, would still impose financial strain on VW's U.S. sales, as the current 15% tariff remains significant.
In the first half of 2025, VW reported that U.S. import tariffs cost it around 1.3 billion euros ($1.52 billion), negatively impacting its operating profit alongside other factors. This financial strain is evident in the operating profit of Porsche, which dropped by more than 90 percent during the same period.
Volkswagen's boss, Oliver Blume, has stated that for every dollar VW invests in the USA, a dollar in tariffs will be waived. He sees this deal as a win-win situation, offering growth opportunities in the USA and positive economic development. The deal, if finalized, could also lead to the establishment of a new Audi plant in the USA.
However, the negotiations are currently on hold due to the EU-US deal. Volkswagen is planning investments in double-digit billions of dollars, but the final amount and the specifics of the deal are yet to be determined.
The increasing competitive pressure from China is putting Volkswagen under strain, and the sluggish electric vehicle business of Volkswagen is another challenge. Despite these difficulties, Volkswagen is hopeful that the tariffs will not be temporary and that they will be waived as part of the proposed deal.
In a separate issue, Volkswagen has recalled the Golf model due to a construction error that could have serious consequences. This recall is unrelated to the tariff discussions.
Some experts attribute the drop in profits to a correction to the pre-Corona level, signaling the end of the era of fat margins in the automotive industry. The increasing competitive pressure and the need for significant investments in electric vehicles are contributing factors to this trend.
Despite these challenges, Volkswagen remains optimistic about its future in the U.S. market, hoping that the proposed tariff relief deal will be finalized and provide a positive boost to its operations. Official updates from the U.S. Trade Representative do not mention a finalized special deal with Volkswagen specifically, suggesting that negotiations are ongoing or that any agreement remains confidential.
- Volkswagen's proposed deal with the U.S. government, encompassing investments in the new US brand Scout, software projects with Rivian, and commitments for Volkswagen and Audi, aims to address financial challenges in the automotive industry, particularly tariffs in transportation, which have reportedly cost Volkswagen around 1.3 billion euros in the first half of 2025.
- The potential waiving of tariffs for investments in the USA, as envisioned by Volkswagen's boss, Oliver Blume, could not only offer growth opportunities in the automotive industry but also lead to the establishment of a new Audi plant in the USA, potentially alleviating the financial strain imposed by tariffs in the finance sector.
