Volkswagen shares fall as markets struggles to digest unions deal

By Ozan Ergenay and Andrey Sychev

(Reuters) – Volkswagen (ETR:VOWG_p) shares have been down 3% in early commerce on Monday with analysts citing uncertainty in regards to the automaker’s cost-cutting cope with unions and sure headwinds in 2025.

Friday’s settlement, hailed by unions as a “Christmas miracle”, requires greater than 35,000 future job cuts and a discount of manufacturing by nearly 1 / 4, however with out fast plant closures or layoffs.

It fell wanting administration’s preliminary ambitions and market expectations, and lacked a way of urgency, in line with Jefferies analyst Philippe Houchois.

Given the tempo of change at rival corporations and the aggressive surroundings within the sector, “there’s a danger that the good points will come too late and won’t be ample,” ODDO BHF analysts wrote in a observe to purchasers.

VW’s earnings momentum can be unlikely to enhance considerably subsequent 12 months given weak demand in China and potential tariffs after Donald Trump’s election, they added.

Analysts at each Jefferies and ODDO BHF stated extra particulars have been wanted to know how VW’s administration intends to attain its introduced value cuts of 15 billion euros ($15.61 billion) a 12 months.

The deal’s influence on prices will develop into seen solely after 2025, and that is only the start of a 5-year course of, J.P. Morgan analysts wrote in a observe, although they known as it “a optimistic step in the fitting route”.

Volkswagen shares have been down 2.39% at 86.68 euros in Frankfurt as of 1051 GMT.

Shares in German friends BMW (ETR:BMWG), Mercedes-Benz (OTC:MBGAF), VW’s main shareholder Porsche Automobil Holding and Porsche AG have been down between 0.9% and 1.7%.

Volkswagen shares are down greater than 20% this 12 months and are buying and selling round their 2010 ranges.

($1 = 0.9610 euros)