Volkswagen Shares Decline Amid Cost-Cutting Deal

By Ozan Ergenay and Andrey Sychev

(Reuters) – Volkswagen (ETR:VOWG_p) shares fell 3% in early trading on Monday as analysts expressed concerns over the automaker’s cost-cutting agreement with unions and anticipated challenges in 2025.

Friday’s deal, celebrated by unions as a “Christmas miracle,” entails over 35,000 job cuts and a nearly 25% reduction in production, though it does not involve immediate plant closures or layoffs.

However, this agreement did not meet management’s initial goals or market expectations and was criticized for lacking urgency, according to Jefferies analyst Philippe Houchois.

Due to rapid changes among competitors and an increasingly tough industry environment, ODDO BHF analysts warned that Volkswagen’s measures may not yield timely or sufficient benefits.

Furthermore, VW’s earnings outlook is expected to remain weak in the coming year, primarily due to low demand in China and potential tariffs arising from Donald Trump’s election.

Jefferies and ODDO BHF analysts indicated that further details are required to understand how Volkswagen plans to execute its €15 billion ($15.61 billion) annual cost-cutting initiative.

The financial implications of the agreement will only become apparent after 2025, and analysts at J.P. Morgan described it as merely the start of a five-year plan while viewing it as a positive move forward.

As of 1051 GMT, Volkswagen shares had decreased by 2.39%, trading at €86.68 in Frankfurt.

Stocks of German rivals BMW (ETR:BMWG), Mercedes-Benz (OTC:MBGAF), and VW's major shareholder Porsche Automobil Holding, along with Porsche AG, were down between 0.9% and 1.7%.

Year-to-date, Volkswagen shares have declined over 20% and are currently trading at levels similar to those seen in 2010.

($1 = 0.9610 euros)