German auto giant Volkswagen's (VWAGY) tariff hit in the third quarter hurt the bottom line by nearly $1 billion, with the 2025 tally ballooning to an amount that could eat heavily into full-year profits. Volkswagen reported in its third quarter financial disclosure that US tariffs on imported vehicles stood at 800 billion euros ($925 million), with its total tariff blow through the first nine months of the year totaling 2.1 billion euros ($2.44 billion). "Group operating margin is 5.4 percent — at first ...

Core Points - Volkswagen has indicated that it cannot rule out production stoppages due to supply chain issues stemming from a dispute over Dutch chip maker Nexperia, which poses a threat to Europe's auto sector [1][2][3] - The Dutch government seized control of Nexperia last month, raising concerns about intellectual property, while China has restricted exports of essential products needed by European car manufacturers [2][7] - Volkswagen has communicated to its staff that, while production has not yet been affected by chip shortages, the situation is dynamic and could change in the short term [2][3] Production Impact - Reports suggest that Volkswagen may plan production stoppages starting next Wednesday, initially affecting the Golf series and subsequently other models [4] - The company is currently monitoring the situation closely and has not confirmed any specific plans regarding production halts [4][6] - Volkswagen will temporarily pause production of its Golf and Tiguan models at its Wolfsburg plant on Friday for an unrelated inventory issue, clarifying that this is not connected to chip supply problems [5] Industry Context - The ongoing dispute over Nexperia adds to existing global trade tensions impacting European carmakers, including increased U.S. import tariffs and Chinese export restrictions on rare earths [7] - Other automakers, such as BMW and Mercedes, are also taking steps to secure their production in light of the Nexperia situation [7] - Recent discussions between Dutch and Chinese economy ministers did not yield a resolution to the Nexperia impasse [8]

Group 1 - Volkswagen (VW) is experiencing a production slowdown for the Golf and Tiguan models due to concerns over a supply chain shock linked to a chip shortage from a key supplier in the Netherlands [1] - VW has denied that the production pause is due to chip supply issues, stating that the adjustment was planned to align with seasonal inventory trends, and the pause is expected to end by the end of the week [2] - The Dutch government has implemented emergency measures on the China-owned semiconductor maker Nexperia, which has resulted in the Chinese government banning exports of Nexperia's semiconductor products, crucial for Europe's auto industry [3] Group 2 - The European Automobile Manufacturers' Association (ACEA) has indicated that while alternative chips are available, the process of re-homologation and ramp-up could take several months, with existing stocks of Nexperia components potentially running out within weeks [4] - ACEA's director general, Sigrid de Vries, emphasized that despite efforts to diversify supply chains, risks cannot be completely eliminated, affecting a wide range of suppliers and nearly all members of the association [4] - The current situation has been described as alarming, with a call for quick and pragmatic solutions from all involved countries [5]

Core Viewpoint - Honda has halted plans for a large electric SUV due to weaker-than-expected demand for sizable electric vehicles and the impact of President Trump's decision to cut EV incentives in the US [1][2][4]. Group 1: Honda's Decision - Honda has reportedly scrapped the development of a seven-seat electric SUV, which was initially planned to follow the five-seat SUV and sedan based on the Concept 0 unveiled at CES [1][4]. - The company has cut approximately $48 billion (¥7 trillion) from its research and development budget for electric vehicles [4]. Group 2: Market Context - Demand for large electric cars has been lower than anticipated, influencing Honda's decision to suspend its EV plans [2][9]. - Other manufacturers, including Ferrari and Lamborghini, have also delayed or pushed back their electric vehicle projects in response to market conditions [12]. Group 3: Broader Industry Trends - The electric vehicle market is facing challenges, as evidenced by Kia's EV9 selling only 165 units in Australia compared to 5,165 units of the combustion-powered Sorento in the first half of the year [8][11]. - Major brands like Mercedes and VW are experiencing significant sales ratios favoring combustion-powered models over their electric counterparts [11].