By Ozan Ergenay and Andrei Sychev
(Reuters) – Volkswagen shares fell 3% in early trading on Monday, with analysts citing uncertainty over the automaker’s cost-cutting deal with unions and likely headwinds in 2025.
Friday’s deal, hailed by unions as a “Christmas miracle,” calls for more than 35,000 future job losses and a cut in production by almost a quarter, but without immediate factory closures or layoffs.
According to Jefferies analyst Philippe Houchois, the crisis fell short of management’s initial ambitions and market expectations, and lacked a sense of urgency.
Given the pace of change at rival companies and the industry’s competitive environment, “there is a risk that gains will come too late and will not be sufficient,” ODDO BHF analysts wrote in a note to clients.
VW’s earnings momentum is also unlikely to improve significantly next year given weak demand in China and possible tariffs after the election of Donald Trump, they added.
Analysts at both Jefferies and ODDO BHF said more details are needed to understand how VW management plans to achieve announced cost cuts of 15 billion euros ($15.61 billion) per year.
The deal’s impact on costs won’t be seen until after 2025, and this is just the start of a five-year process, JP Morgan analysts wrote in a note, though they called it “a positive step in the right direction.”
Volkswagen shares fell 2.39% to 86.68 euros as of 1051 GMT in Frankfurt.
Shares of German colleagues BMW, Mercedes-Benz, VW’s major shareholder Porsche Automobil Holding and Porsche AG fell between 0.9% and 1.7%.
Volkswagen shares are down more than 20% this year and are trading around 2010 levels.
($1 = 0.9610 euros)
(Reporting by Ozan Ergenay and Andrey Sychev in Gdansk; Editing by Jason Neely)
