Audi profits plunge as US tariffs and China slump take heavy toll

Audi's third-quarter net profit plunged 87% year-on-year to €95 million ($106 million), the Volkswagen subsidiary said on Friday.

The German carmaker's profit fell sharply from €718 million in the same period last year, as weak demand in China for its combustion-engine vehicles, growing competition, US tariffs and rising energy costs weighed on earnings.

The figures mark a further deterioration in the financial performance of the Audi Group, which also includes luxury car brands Lamborghini and Bentley, as well as motorcycle manufacturer Ducati.

For the first nine months of the year, Audi reported net profit of €1.22 billion on revenue of €42 billion, both representing sharp declines from the previous year.

Following the weak third quarter, the company lowered its full-year forecast. However, the revised outlook still points to an improvement in the final three months of the year, according to chief financial officer Jürgen Rittersberger.

Growing pressure to cut costs

Audi has been particularly hard hit because it lacks its own production plant in the key US market - leaving it exposed to Trump administration tariffs on foreign-built vehicles - and is undergoing model changeovers for several cars.

By comparison, rival Mercedes-Benz reported a third-quarter profit of €1.52 billion, while BMW is due to release its quarterly results next week.

Rittersberger said the need for action at Audi is "great."

He said the business environment had deteriorated significantly in the quarter, adding that Audi needed to step up its cost-cutting efforts. 

The company plans to tighten cost controls, reduce complexity and improve efficiency, but has provided few details about the implications for its German production sites.

Audi said further measures would be developed in consultation with employee representatives to safeguard competitiveness and jobs in the long term.

An agreement reached last year already included plans to cut thousands of jobs in Germany.

The company is currently negotiating further savings, with the future of its Neckarsulm plant in south-western Germany under review.