On the Dash:
- Audi’s push toward higher-margin models like the Q9 SUV signals a renewed focus on profitability over volume.
- Tariffs and regulatory costs, including €1.2 billion in U.S. tariffs, continue to pressure automaker margins and pricing strategies.
- Ongoing weakness in China and shifting EV strategies highlight the importance of market-specific product alignment.
Volkswagen’s premium brand group, led by Audi, expects profitability to improve this year as new models and efficiency measures help offset the impact of tariffs and intensifying competition in China.
The group, which includes Lamborghini, Bentley, and Ducati, projects an operating return in the range of 6% to 8%, up from 5.1% last year. The outlook comes as Volkswagen works to stabilize Audi and Porsche, two brands that have historically driven strong returns but have recently faced margin pressure.
Audi’s operating return fell to 3.9% last year, weighed down by tariffs and costs associated with scaling back its electric vehicle strategy. U.S. tariffs alone totaled €1.2 billion ($1.4 billion), while additional costs tied to CO2 compliance also impacted results.
To improve efficiency, Volkswagen plans to cut 7,500 jobs at its German sites by 2029. Audi Chief Financial Officer Jürgen Rittersberger said the brand aims to restore double-digit returns by 2030, progressing “step by step.”
New product launches are expected to play a central role in that recovery. Audi is preparing to introduce the Q9 SUV, a full-size model designed to better align with U.S. consumer demand, where the brand has struggled due to a limited lineup of larger vehicles. In Europe, Audi will expand its electric offerings with the compact A2 e-tron.
China remains a key challenge. Deliveries declined last year, though the pace of the drop slowed to 5% as domestic automakers such as BYD and Xiaomi gained ground with competitively priced, technology-focused electric vehicles.
To strengthen its position, Audi plans to debut the AUDI E7X SUV, its second China-only model developed with partner SAIC, at the Beijing auto show.
