By Ozan Ergenay and Andrey Sychev
(Reuters) – Shares of Volkswagen (ETR: ) were down 3% in early trading on Monday with analysts citing uncertainty about the automaker's cost-cutting and mergers and potential headwinds in 2025.
Friday's deal, hailed by unions as a “Christmas miracle”, calls for more than 35,000 future job cuts and cuts in production by about a quarter, but without immediate plant closures or layoffs.
It fell short of management's initial ambitions and market expectations, and lacked a sense of urgency, according to Jefferies analyst Philippe Houchois.
Given the speed of change in competing firms and the competitive environment in the sector, “there is a risk that profits will arrive late and will not be enough,” ODDO BHF analysts wrote in a note to sponsors.
VW's earnings are also unlikely to improve significantly next year given weak demand in China and possible tariffs following the election of Donald Trump, they added.
Analysts at both Jefferies and ODDO BHF said more details were needed to understand how VW management was determined to implement the announced $15 billion ($15.61 billion) annual cost reductions.
The impact of the agreement on costs will be visible only after 2025, and this is the beginning of the 5-year process, JP Morgan analysts wrote in the article, although they called it “a good step in the right direction”.
Volkswagen shares were down 2.39% at 86.68 euros in Frankfurt as of 1051 GMT.
Shares in German peers BMW (ETR :), Mercedes-Benz (OTC :), VW's main shareholder Porsche Automobil Holding and Porsche AG were down between 0.9% and 1.7%.
Volkswagen shares are down more than 20% this year and are trading around 2010 levels.
($1 = 0.9610 euro)