(July 27): The Audi group sees lower sales and profitability this year as worsening conditions in China and US tariffs hamper the carmaker’s turnaround efforts.

The Volkswagen AG-owned manufacturer on Monday cut its operating-margin guidance by one percentage point to as low as 5%. It also pared back its expectation for revenue to as little as €58 billion (RM270.13 billion), from an earlier expectation of at least €63 billion.

Germany’s automakers are under sustained pressure as once-robust luxury demand in China dwindles and import duties in the US drive up costs. Audi also cited the conflict in the Middle East in dialling back its guidance.

For Volkswagen CEO Oliver Blume, prolonged softness at Audi threatens a crucial profit source as he battles to cut capacity and revive returns. The operating margin of the Audi group, which also includes Bentley, Lamborghini and motorcycle maker Ducati, came in at 3.8% in the first half.

Europe’s biggest automaker cut its revenue outlook last week but maintained its operating-margin guidance, which assumes a stronger second-half performance. At Audi, CEO Gernot Döllner is cutting costs and planning new models to revive sales. They include the flagship Q9 sport utility vehicle that will launch in North America and Europe in the fourth quarter.

The challenge is most acute in China, where a property downturn is weighing on demand. Mercedes-Benz Group AG, BMW AG and Porsche AG face similar pressure as manufacturers including BYD Co dominate on electric vehicles and push further into higher-priced segments.

Uploaded by Arion Yeow