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

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.

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.