Car manufacturers around the world are going through difficult times. They are being hit by Trump's tariffs, currency instability, the cancellation of incentives for electric vehicles in the US, and market competition. Each brand is adapting to the new reality in its own way. Some are lowering their profit forecasts, while others are postponing planned releases of new models. Nevertheless, even in such difficult conditions, some car brands are maintaining their positions and setting new sales records.
US automakers suffer from Trump's tariffs and the cancellation of incentives for electric vehicles
The American automotive industry has suffered more than most other industries from the tariffs imposed by its own president, Donald Trump, as taxes on imported cars and auto parts were introduced long before most other tariffs came into effect. And while the industry used to be able to cope with them without raising car prices thanks to its stock of imported cars and parts, the tariffs are now causing serious damage to automakers.
For example, General Motors, the largest automaker in the US, reported that it lost $1.1 billion in the second quarter of 2025 due to tariffs and duties. According to GM management forecasts, the total damage caused to the company by tariffs will amount to $4-5 billion in 2025. In the second quarter alone, GM's net profit fell by 21% compared to the same period last year.
GM also said it does not plan to raise car prices in the near future to offset the increased costs associated with tariffs. According to management forecasts, prices across the industry as a whole will rise by only 0.5-1% per year. Following the disappointing news, General Motors shares fell 3% in value.
Billionaire Elon Musk also warned that Tesla, the electric car manufacturer he heads, is facing several difficult quarters ahead.
In addition to eliminating the $7,500 tax credit for electric vehicle purchases, Trump has repealed federal fuel economy standards, which have been a significant source of revenue for Tesla for many years. After Musk's speech, Tesla shares plummeted 9.5%.
As Bloomberg notes, Tesla is also struggling due to growing competition and the consequences of Musk's political activities. Investors are largely willing to turn a blind eye to declining sales and settle for Musk's promises related to the development of artificial intelligence, robots, and autonomous driving technologies.
However, Musk remains optimistic and confident of success. Tesla's management has announced that the company will begin production of a more affordable electric vehicle in June 2025, but will delay its release until the end of September, when tax incentives expire. This model, which Musk says will be similar to the Model Y, is considered key to increasing sales.
Another bet for Tesla will be the expansion of its autonomous robotaxi service, which has already been launched in Austin. Musk promises that by the end of the year, about half of Americans will have the opportunity to use robotaxi services.
European car manufacturers are losing billions
On Sunday, July 27, the US and the EU signed a framework trade agreement that provides for a 15% import duty on most goods from Europe. They are putting pressure on the entire European automotive industry. On July 16, shares in French carmaker Renault plummeted 16% in a single day, hitting a record low since 2020. The reason was a downward revision of the financial forecast for 2025 and the appointment of a new interim CEO.
Premium brand manufacturers from the EU are also suffering. Volkswagen AG sold fewer of its most profitable cars in the second quarter because US tariffs reduced shipments of European premium brands. In the three months to June 2025, sales of Porsche, Audi, Lamborghini, and Bentley cars, which belong to Volkswagen, fell by 7.7% to 480,200 vehicles.
Volkswagen's sales in the US plummeted by 16% in the second quarter of 2025. Before the tariffs were introduced in the first quarter of 2025, they had grown by 4.4%. European automakers are also losing ground in China, where local electric vehicle manufacturers such as BYD dominate. Sales of Volkswagen electric vehicles in China fell by almost a third in the second quarter.
Trump's tariffs will cost the Porsche brand an additional EUR 1.3 billion in expenses. Porsche's operating profit in the second quarter of 2025 fell to EUR 245 million, and the profitability of sales was 2.6%. This is the lowest figure since the brand's initial public offering in 2022. The company's sales declined by 6% in the second quarter. Management warned that the coming months would be difficult, but put Porsche's 28% drop in sales in China at the top of the list of problems.
The Audi brand, which has also been affected by tariffs, is considering setting up production in the US to overcome trade barriers and will make a decision by the end of the year.
Italian luxury sports car manufacturer Lamborghini said that despite record deliveries in the first half of 2025, its operating profit for the period fell from EUR 458 million a year earlier to EUR 431 million in 2025.
German company Mercedes-Benz has lowered its annual sales and profit forecasts, noting that it will lose nearly $420 million in the second quarter of 2025 due to US tariffs. In the second quarter, the company's net profit fell 3.3 times to EUR 915 million.
Toyota sales break records
While American and European competitors are experiencing difficulties, Japanese car manufacturer Toyota is enjoying success. According to the company, its global sales and production have reached record levels. In the first half of 2025, Toyota's sales grew by 5.5% compared to the same period last year and exceeded 5.1 million vehicles.
In the first six months of 2025, Toyota's global car production increased by 5.8% year-on-year to 4.9 million vehicles. The company's production in its home country of Japan grew by 20%. Toyota's success was driven by high demand for hybrid cars, which accounted for 43% of the company's sales during the period.
