- Title: Auto stocks make gains after VW announces 30,000 job cuts
- Date: 18th November 2016
- Summary: FRANKFURT, GERMANY (NOVEMBER 18, 2016) (REUTERS) DAX CURVE ON BOARD AT FRANKFURT STOCK EXCHANGE TRADER DAX CURVE TRADER VOLKSWAGEN SHARES ON BOARD TRADER AUTO INDUSTRY SHARES ON BOARD TRADER AUTO INDUSTRY SHARES ON BOARD TRADER BANK SHARES ON BOARD TRADER AUTO INDUSTRY SHARES ON BOARD (SOUNDBITE) (German) CAPITAL MARKETS STRATEGIST AT ODDO SEYDLER BANK, OLIVER ROTH, SAYING: "On the one hand there's no wave of euphoria because the programme VW has presented is socially acceptable, which in short means that its effects will only be felt in the long term. On the other hand I think it's a positive signal, because all car producers must reposition and face the demands of the future and digitalisation. For that, you need money, and at VW the litigation situation means that money is in short supply at the moment." DAX CURVE BOARD SHOWING LOSS OF 12.24 POINTS, OR 0.11 PERCENT (SOUNDBITE) (German) CAPITAL MARKETS STRATEGIST AT ODDO SEYDLER BANK, OLIVER ROTH, SAYING: "German car producers including VW have taken a rather shabby approach to the question of electromobility over the last few years. Now they are trying to make a great leap forwards to meet the demands of the future. But it's not just about the engines, it's about driving modes too. Autonomous driving, driverless driving is the first thing to mention here, and this will move forward significantly in the coming years. Therefore the car producers, Germany's most important industry, have to prepare for the future and set money aside for this." TRADER DAX CURVE TRADING FLOOR
- Embargoed: 3rd December 2016 12:34
- Keywords: Volkswagen VW overhaul cuts job losses emissions scandal markets stocks
- Location: FRANKFURT, GERMANY
- City: FRANKFURT, GERMANY
- Country: Germany
- Topics: Company News Markets,Economic Events
- Reuters ID: LVA00158Z2AH9
- Aspect Ratio: 16:9
- Story Text: Volkswagen stocks rose on Friday (November 11) after Europe's biggest car maker unveiled a deal with unions to cut 30,000 jobs at the core VW brand in exchange for avoiding forced redundancies in Germany until 2025, a compromise which leaves the carmaker's profitability still lagging rivals.
The turnaround plan announced on Friday will lead to 3.7 billion euros ($3.9 billion) in annual efficiency gains and lift the VW brand's operating margin to 4 percent by 2020, from an expected 2 percent this year.
That target still remains below rival European carmakers such as Renault and Peugeot Citroen, which are targeting an operating margin of 6 percent in 2021.
Analysts and investors nonetheless welcomed the deal, sending the share more than 2 percent higher to the top of the blue-chip DAX index in early Frankfurt trading.
One trader at the Frankfurt Stock Exchange said this was a short boost to shares but that ultimately investor enthusiasm is muted due to the long-term nature of the plan.
"On the one hand there's no wave of euphoria because the programme VW has presented is socially acceptable, which in short means that its effects will only be felt in the long term. On the other hand I think it's a positive signal, because all car producers must reposition and face the demands of the future and digitalisation. For that, you need money, and at VW the litigation situation means that money is in short supply at the moment," Oliver Roth, capital markets strategist at Oddo Seydler Bank, said.
Volkswagen is trying to increase savings at its biggest business in its home base of Germany, where its costs are high.
It must also find billions of euros to pay fines and settlements stemming from its diesel emissions cheating scandal as well as fund a strategic shift towards electric and self-drive cars.
"German car producers including VW have taken a rather shabby approach to the question of electromobility over the last few years. Now they are trying to make a great leap forwards to meet the demands of the future. But it's not just about the engines, it's about driving modes too. Autonomous driving, driverless driving is the first thing to mention here, and this will move forward significantly in the coming years. Therefore the car producers, Germany's most important industry, have to prepare for the future and set money aside for this," Roth said.
Volkswagen will build electric cars at its factories in Zwickau and Wolfsburg. Electric motors will be built in Kassel, and VW will start battery cell production and development in Salzgitter. Volkswagen will also build battery packs for electric and hybrid cars at its plant in Braunschweig, the company said. - Copyright Holder: REUTERS
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