BERLIN, July 31 (Xinhua) -- Germany's top automakers posted steep declines in first-half earnings, blaming punitive U.S. tariffs that have added to the mounting pressure of a costly shift to electric mobility and weakening demand for traditional combustion engine models.
BMW, Mercedes-Benz and Volkswagen all flagged the direct impact of Washington's trade measures, underscoring how geopolitical headwinds are exacerbating structural challenges facing Europe's automotive powerhouse.
In its financial report released Thursday, BMW Group posted a 29 percent drop in net profit for the first six months, to 4.02 billion euros (4.6 billion U.S. dollars), marking its third consecutive year of first-half earnings decline.
The Munich-based carmaker cited exchange rate effects among key headwinds and explicitly warned that tariffs would reduce its full-year automotive EBIT (earnings before interest and taxes) margin by around 1.25 percentage points. That compares with an 8.6 percent margin in 2024.
"U.S. trade policy and potential countermeasures from other countries may lead to slower global economic development," BMW said in a statement, adding that tariffs could fuel consumer price inflation in the American market.
Still, CEO Oliver Zipse pointed to "the robustness of our business model," noting that BMW's production presence in the United States had helped shield it from the worst effects of the 25 percent duties Washington imposed in early April. However, the company continues to import some models into the United States, and about half of its American-made vehicles are exported, leaving it vulnerable to retaliatory tariffs.
Mercedes-Benz was hit harder. The premium brand reported a 56 percent plunge in net profit to 2.7 billion euros for the first half, down from 6.1 billion euros a year earlier. It blamed the drop on "tariffs and macro environment," and warned that full-year sales would be "significantly below" 2024 levels.
"We're adapting to new geopolitical realities by using our global production footprint intelligently," said CEO Ola Kaellenius, adding the Mercedes is ramping up its cost-efficiency efforts under its "Next Level Performance" program.
Volkswagen Group also reported a 33 percent fall in first-half operating profit, citing around 1.3 billion euros in additional costs related to U.S. tariffs. Europe's largest automaker has lowered its full-year operating return on sales forecast to 4 to 5 percent, down from a previous range of 5.5 to 6.5 percent, assuming tariffs remain between 10 and 27.5 percent in the second half.
The three German auto giants together account for around 73 percent of all European Union (EU) car exports to the United States last year. Washington imposed an additional 25 percent duties on EU-made vehicles starting from April 3, and later extended duties to car parts in May. According to Germany's Federal Statistical Office, car exports to the United States in April and May slumped by 23.5 percent year-on-year.
In response to the tariff hike, Volkswagen's luxury brand Audi was reported to have suspended deliveries of affected vehicles arriving in the United States after April 2. Lacking a U.S. production site, the company incurred approximately 600 million euros in extra expenses tied to the tariffs.
In its earnings report this week, Audi blamed a 37.5 percent plunge in its first-half profit on "significantly higher costs stemming from U.S. auto tariffs."
Another high-end Volkswagen subsidiary, Porsche, said it absorbed roughly 300 million euros in extra costs during April and May as it shielded customers from the full impact of the duties.
The damage extends beyond automakers. German auto-parts giant ZF Group on Thursday reported a 10 percent drop in sales to 19.7 billion euros from January to June, despite a modest increase in profit. CEO Holger Klein cited ongoing uncertainty over U.S. trade policy and sluggish ramp-up of e-mobility, saying the company was undergoing "the largest restructuring project in its history" to navigate the transition.
While the EU and the United States reached a deal over the weekend to cap auto tariffs at 15 percent, German industry remains wary.
Hildegard Mueller, president of the German Association of the Automotive Industry (VDA), warned that the revised tariff rate could still cost German carmakers several billion euros annually, deepening the financial strain during a period of fundamental industry transformation. (1 euro = 1.14 U.S. dollar) ■
