Europe's biggest carmaker reported operating profit of 2.9 billion euros ($3.3 billion) for the first three months of the year.

Volkswagen said on Wednesday it expects profit margins this year towards the bottom end of its forecast, the latest automaker to strike a downbeat tone as an industry already pressured by costs and competition grapples with tariff uncertainty.

Volkswagen AG’s earnings dropped by 40% in the first quarter as higher manufacturing costs cut into margins and US tariffs clouded the German carmaker’s outlook.