[INGOLSTADT, Germany] Volkswagen’s Audi Group walked back its financial targets for the year because of “intense” competition and economic challenges including tariffs in the US.
The sub-division, comprising the Audi, Lamborghini, Bentley and Ducati brands, now expects an operating margin of 4 per cent to 6 per cent for the year, compared with a previous forecast of as much as 7 per cent. Sister brand Porsche scaling back its EV ambitions added to the strains, Audi said on Friday (Oct 31).
“The situation remains very demanding,” chief financial officer Jürgen Rittersberger said on a call with reporters, noting that the brand is expecting a US$1.5 billion hit from tariffs this year.
The luxury-car maker also needs to find a solution for models it had planned to build on a joint EV platform with Porsche that has now been delayed, he said.
Delivering on the financial goals will also depend on sourcing enough semiconductors as part of the disruption to the supply of chips made by Nexperia, Audi said, echoing VW’s warning on Thursday. Manufacturers are at risk of production shutdowns after the little-known chipmaker in the Netherlands emerged in the crossfire of a dispute with China.
Aside from renewed supply chain risk, the VW unit is seeking to streamline its business to cut costs, while working on a record model offensive. Audi, historically a major profit driver for its parent, has been hit hard by tariffs in the US and sliding market share in China.
During the third quarter, the Audi brand posted an operating margin of 2 per cent for a profit of 280 million euros (S$421.4 million). That compares with a slightly negative result last year when the brand booked costs related to the closure of its Brussels factory.
CFO Rittersberger said Audi is still considering a range of options to start making cars in the US. A decision will be made before the end of the year, he told reporters on a call. BLOOMBERG
