The automotive industry is facing significant headwinds, largely due to the turbulent waters of President Donald Trump’s trade policies. Several major European automakers recently reported a dramatic downturn in first-quarter profits and, in a move reflecting the uncertainty, have suspended or withdrawn their full-year financial guidance. This unprecedented action underscores the profound impact of the 25% tariff on automotive imports into the U.S., imposed earlier in April.
The fallout has been swift and widespread. Stellantis, the parent company of iconic brands like Jeep, Dodge, Fiat, Chrysler, and Peugeot, announced the withdrawal of its full-year financial forecast, citing the unpredictable nature of the tariff situation. They emphasized their active engagement with policymakers while simultaneously adjusting production plans and sourcing strategies. Their first-quarter net revenues showed a concerning 14% decline compared to the previous year.
Mercedes-Benz followed suit, scrapping its 2025 earnings guidance and reporting significantly lower first-quarter profits. The company candidly stated that the current volatility surrounding tariffs and their potential effects rendered accurate financial forecasting impossible. They acknowledged that if current trade policies persist, their earnings and cash flow would suffer.
While Volkswagen, Europe’s largest carmaker, didn’t completely withdraw its guidance, they did indicate that their operating return on sales, net cash flow, and net liquidity would likely fall at the lower end of their annual forecasts. They attributed this to escalating trade restrictions, political uncertainty, and stringent emissions regulations. Their first-quarter operating profit experienced a sharp 37% drop compared to the previous year.
Volvo Cars, heavily reliant on European imports for its hybrid and electric models, also felt the brunt of the tariffs, abandoning its financial guidance for both 2025 and 2026. This led to the announcement of a significant cost-cutting plan involving investment reductions and layoffs across its global operations. The company’s CEO highlighted the immense challenges in providing guidance to investors amid the tariff uncertainty and the need for a long-term trade agreement with the U.S.
Porsche, a subsidiary of the Volkswagen Group, also adjusted its sales and profit margin forecasts downward, citing negative impacts from Trump’s tariffs during April and May. They admitted that the current situation made reliable long-term forecasting impossible.
Even with Trump’s recent attempt to ease some tariff pressures, the lingering uncertainty surrounding trade policies continues to stifle long-term investment decisions within the automotive sector. The industry waits with bated breath, hoping for a clearer path forward amid this ongoing tariff turmoil.
