INGOLSTADT, Germany, March 17 (Reuters) - German

automaker Volkswagen's premium brand group Audi

expects a recovery in its profit margin this year after tariffs

dealt a 1.2-billion-euro blow in 2025, the company said on

Tuesday.

Audi expects an operating margin in the range of 6% to 8% in

2026, from 5.1% in 2025 and 6.0% in 2024.

"Geopolitical uncertainties and global competitive pressure

kept the automotive industry on its toes again last year," Audi

CEO Gernot Doellner said in a statement.

The Volkswagen subsidiary, which includes the Lamborghini,

Bentley and Ducati brands as well as Audi, said cost discipline

helped to partially offset costs in 2025 that led to a 14% slump

in operating profit, to 3.4 billion euros.

Tariff costs are expected to persist at the current level,

as questions persist over whether Audi will set up its first

U.S. plant to ease the impact.

Like its peers, Audi is battling challenges across its key

markets, including strong competition in China.

"We will have to find different answers across regions,"

Doellner said.

In China, where Audi deliveries slumped 5% in 2025, the

brand is trying to win back customers with a 'sister brand' -

dropping the German carmaker's famous rings - launching the

all-electric E5 Sportback, developed with state-owned Chinese

carmaker SAIC.

Sales for the China-exclusive car were below expectations in

the first two months of the year, according to finance chief

Juergen Rittersberger.