Is it advisable for investors to offload shares in automobile companies such as BMW and Volkswagen following the recent market dwindle?
In the rapidly evolving automotive landscape, both Volkswagen and BMW are navigating through turbulent waters.
Recent reports suggest that Volkswagen's struggles might be linked to faulty braking systems supplied by Continental. This has led to a downgraded outlook and subsequent losses for the company, with the latest figures indicating a decline of between three and five percent. The losses have affected Volkswagen's stock, pushing it to its lowest level in years and landing the company at the bottom of the DAX rankings.
Despite these setbacks, Volkswagen's strong brand and substantial cash reserves could help the company weather these tough times. The recently delayed Trinity car, a significant new model for the company, will be crucial in demonstrating a turnaround.
Meanwhile, BMW is seen to be capitalising on strategic advantages in the area of electric mobility. Analysts praise BMW's "Neue Klasse" platform, exemplified by the iX3 model, for its technological innovations, long range, fast charging capabilities, and improved margins. This approach is viewed as a key factor in BMW's future competitiveness and economic recovery, amid recent profit declines.
BMW's stock also took a hit, losing more than eleven percent on Tuesday. The loss landed BMW at the bottom of the DAX rankings, mirroring Volkswagen's experience. However, DZ Bank sees favorable valuation for BMW in the area of electric mobility.
Other automakers, including Mercedes-Benz, Porsche, and Volkswagen, have also experienced daily losses. The German auto industry is currently in a difficult transformation process due to the mobility shift and other geopolitical factors.
In the midst of these challenges, Volkswagen's CEO and majority shareholder, Bernd Förtsch, holds positions in Mercedes-Benz and Volkswagen Vz., while the managing editor-in-chief, Frank Pöpsel, has positions in Volkswagen Vz..
As both companies work towards a turnaround, investors will need to exercise patience with Volkswagen until the turnaround with new models like the Trinity car becomes evident. The turnaround for Volkswagen is crucial, as its performance with new models will significantly impact the company's future.
In the first half of the year, BMW reported an almost 15 percent decrease in surplus, highlighting the industry-wide challenges faced by automakers. However, experts still see strategic competitive advantages for BMW in the area of electric mobility.
In conclusion, the German auto industry is undergoing a significant transformation, and both Volkswagen and BMW are feeling the effects. While the road ahead may be challenging, both companies have the potential to emerge stronger and more competitive in the electric mobility market.
