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By Victoria Waldersee
WOLFSBURG, Germany (Reuters) - Volkswagen, Europe's top carmaker, forecast another challenging year of ramping up EV sales, cutting costs, and navigating trade tensions as it seeks to streamline its operations in Europe and catch up with cheaper and faster rivals in China.
The carmaker is in the midst of deep changes in its two main markets of China and Germany, with earnings forecast to drop in China by up to 1 billion euros ($1.09 billion) as it steps back to work on new models, and major cost cuts underway in Germany which should yield 1 billion euros in savings by year-end, CFO Arno Antlitz said at its annual results conference on Tuesday.
In North America, a major export market for Volkswagen, Chief Executive Oliver Blume said the carmaker is "waiting to see what's on the table" regarding Donald Trump's threats to impose tariffs on imports from Mexico and the EU, but remains committed to boosting its market share in the United States.
Asked about tumbling U.S. stocks as investors fear Trump's policies will trigger a U.S. recession, CFO Antlitz said that the carmaker could only focus on what was in its control.
Still, Blume said executives were reviewing plans to bring its CUPRA brand to some U.S. states from 2030, doing a 'reality check' of how the market would develop regarding demand for electric cars.
"Our intention is still there...but we cannot close our eyes to what is happening in the USA," Blume said.
COST CUTS, TRADE FEARS
Volkswagen reported on Tuesday that it expected at best a slight increase in its 2025 operating profit margin, in a range of 5.5% to 6.5%, compared with 5.9% in 2024 as the cost of producing both EVs and combustion engine cars and constructing battery cell plants weighed on earnings.
Its battery subsidiary PowerCo plans to build three plants with a combined capacity of up to 170 gigawatt hours, though Antlitz said the ramp-up of capacity within the plants would be delayed in light of lower EV sales.
Like other European automakers, Volkswagen is attempting to produce more affordable EV models to catch up with cheaper Asian rivals, despite facing significantly higher manufacturing costs, a problem it is trying to tackle via a deep cost-cutting drive.
Ferdinand Dudenhoeffer, head of the CAR think tank at the University of Duisburg-Essen, said Volkswagen was too focused on Germany with its high costs, while tariffs were a real problem, particularly for Porsche and Audi, which have no U.S. manufacturing base.
The outlook for 2025 does not factor in the possible impact of trade tariffs, Antlitz said.