Volkswagen shares fall as markets battle to digest union deal

By Ozan Ergenay and Andrey Sychev

(Reuters) – Volkswagen shares had been down 3% in early buying and selling on Monday, with analysts citing uncertainty over the automaker’s cost-cutting cope with unions and certain headwinds in 2025.

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

In accordance with Jefferies analyst Philippe Houchois, this challenge didn’t meet administration’s preliminary ambitions and market expectations, and lacked a way of urgency.

Given the tempo of improvement of competing firms and the aggressive surroundings within the sector, “there’s a danger that positive aspects come too late and should not ample”, write ODDO BHF analysts in a word to shoppers.

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

Analysts at Jefferies and ODDO BHF stated extra particulars had been wanted to know how VW administration intends to realize introduced price reductions of 15 billion euros ($15.61 billion) a yr.

The fee affect of the deal will solely turn into seen after 2025, and that is solely the beginning of a five-year course of, JP Morgan analysts write in a word, whereas calling it ” not constructive in the proper path.”

Volkswagen shares had been down 2.39% at 86.68 euros in Frankfurt at 10:51 GMT.

Shares of German rivals BMW, Mercedes-Benz, Porsche Automobil Holding, VW’s largest shareholder, and Porsche AG fell between 0.9% and 1.7%.

Volkswagen shares have fallen greater than 20% this yr and are buying and selling round 2010 ranges.

($1 = 0.9610 euros)

(Reporting by Ozan Ergenay and Andrey Sychev in Gdansk; modifying by Jason Neely)