Stocks in the auto industry plummet, potentially offering respite for brands like BMW, Volkswagen, Mercedes-Benz, and others.
In the face of a challenging economic landscape, German automakers are navigating a difficult environment marked by weak sales growth or decline, rising costs from tariffs, and geopolitical uncertainty. This has resulted in reduced profits and lowered financial guidance for companies like BMW, Volkswagen, Mercedes-Benz, and Porsche.
The German auto market is in recession in 2025, with first-half sales down 4.7% primarily due to weak socio-economic conditions domestically and globally. While Germany’s economy is projected to grow slightly by 0.7% in 2025, challenges remain, including weak foreign demand and high costs impacting competitiveness.
BMW, despite selling over 1.2 million cars in H1 2025 and maintaining stable sales volumes, has seen profits decline sharply due to currency headwinds, cooling demand in China, and international trade tariffs. However, the company is aggressively expanding its electrification strategy, with over 25% of its deliveries being electric or plug-in hybrids, and a 34.8% increase in EV sales in Europe specifically. This signals a pivot toward future growth areas amid current financial pressure.
Audi, another major player in the German auto industry, has lower its full-year 2025 revenue forecast to €65-70 billion from an earlier €67.5-72.5 billion, citing increased cost pressures from U.S. import tariffs, internal restructuring, and weakening demand in key markets. Its operating margin forecast was also reduced to 5-7%. Audi’s profit after tax fell 37% in H1 2025 compared to last year, attributed mainly to tariffs and restructuring costs. The recent EU-U.S. trade deal introducing a flat 15% tariff on EU car imports may ease some tariff concerns but still poses a significant cost challenge.
While there is no direct data on Volkswagen (VW) and Mercedes-Benz in the latest results, the general context suggests they face similar headwinds, combining market softness, geopolitical trade pressures, and the need to transition rapidly into EVs to stay competitive.
The broader economic outlook remains cautious: inflation easing and some rebound in domestic demand in Germany could offer support, but energy-intensive sectors and exports (crucial for automakers) face ongoing competitiveness issues.
Conversely, shares of U.S. automaker Tesla rose by double digits on Wednesday, indicating a stark contrast in the fortunes of the two markets.
Amidst this gloomy picture, analysts and BÖRSE ONLINE are recommending buying for the automakers. Porsche AG (WKN: PAG911) presents promising turnaround opportunities, according to some experts. However, given the negative chart trends, operational development, and the risk of further price losses, short-term investors should consider staying away from BMW, Volkswagen, Mercedes-Benz, and their peers.
The stocks of BMW, Volkswagen, Mercedes-Benz, and Porsche experienced a heavy sell-off on Wednesday, losing more than five percent. BMW's current figures show a shrinkage in sales due to weak business in China and additional burdens from problems with the braking systems.
It is important to note that the publishers Börsenmedien AG's CEO, Mr. Bernd Förtsch, and the managing editor, Mr. Frank Pöpsel, have direct and indirect positions in Volkswagen Vz., Mercedes-Benz, and Porsche AG.
Under a potential Trump presidency, high tariffs could be imposed on vehicles, causing pressure on the U.S. market for German automakers. The recent US-EU trade agreement partially mitigates tariff burdens but does not eliminate them.
In conclusion, the German auto industry is facing a difficult period, but there is a strong strategic push towards electrification, with companies like BMW making EVs a key pillar of their future, which may improve resilience and market prospects going forward.
Finance has become a concern for German automakers, as they navigate the German auto market in recession, with reduced profits and lowered financial guidance for companies like BMW, Volkswagen, Mercedes-Benz, and Porsche. High costs impacting competitiveness, including trade tariffs and currency headwinds, are compounding challenges for companies in the industry.
