Volkswagen Core Brands See Q1 Revenue Growth Despite Profit Decline

Volkswagen's core brands increased sales and revenue in Q1 2025, while CO₂ compliance costs and US import duties halved operating profit. See full breakdown.

In the first quarter of 2025, Brand Group Core — the cluster of Volkswagen AG’s volume brands including Volkswagen, Škoda, SEAT/CUPRA and Volkswagen Commercial Vehicles — reported growth in sales and revenue, yet a sharp decline in operating profit. While electric vehicles gained traction and new model launches were well received, regulatory and geopolitical pressures weighed heavily on the group's bottom line.

Total revenue rose by 7.8%, reaching €35.34 billion, with unit sales climbing to 1.22 million vehicles. A key driver behind this increase was the surge in deliveries of battery-electric vehicles. However, operating profit dropped by nearly half to €1.12 billion, with the operating margin shrinking to 3.2% from 6.4% a year earlier.

Several factors contributed to this downturn: provisioning for new European CO₂ compliance rules, ongoing litigation expenses related to the diesel issue, and inventory write-downs tied to U.S. import duties that came into effect in April. These external headwinds hit hardest at Volkswagen Passenger Cars, which saw its operating profit plummet by 84.9% compared to Q1 2024.

Škoda Auto proved a notable exception. Thanks to strong demand and disciplined cost management under its Next Level Efficiency+ program, the brand maintained a robust 7.5% operating margin. Meanwhile, SEAT/CUPRA and Volkswagen Commercial Vehicles came under more pressure: SEAT’s profit dropped to just €5 million, and VWN’s earnings fell by 91%.

Against this backdrop, the group is ramping up its transformation efforts. A core initiative is the Electric Urban Car Family project, which aims to launch four affordable EVs priced around €25,000 starting in 2026. These models — two from Volkswagen and one each from Škoda and CUPRA — will be produced in Martorell and Pamplona, Spain, and are expected to generate synergy savings of €650 million over their product lifecycle.

Volkswagen is also reconfiguring its production network: 22 global plants will be organized into five regional clusters to improve efficiency and reduce costs. These moves build on the foundation laid by the Zukunft Volkswagen plan, introduced at the end of 2024. The program includes significant workforce cost reductions, site closures, and shorter vehicle development cycles.

Despite external pressures, Volkswagen remains committed to its goals. Brand Group Core is targeting a medium-term return to an 8% operating margin. With performance initiatives underway and a sharpened focus on sustainability and electrification, this target appears not merely aspirational, but increasingly attainable.

Source: volkswagen-newsroom.com