By Ozan Ergenai and Andrei Sichev
(Reuters) – Shares in Volkswagen ( ETR: ) fell 3% in early trade on Monday, with analysts citing uncertainty over the automaker’s cost-cutting deal with unions and likely backlash in 2025.
Friday’s deal, hailed by unions as a “Christmas miracle,” calls for cutting more than 35,000 jobs and cutting production by nearly a quarter, but without immediate factory closures or layoffs.
It fell short of management’s original ambitions and market expectations and lacked a sense of urgency, according to Jefferies analyst Philip Hushoy.
Given the pace of change at rival firms and the competitive environment in the sector, “there is a risk that the gains will come too late and not be enough,” analysts at ODDO BHF wrote in a note to clients.
VW’s earnings momentum is also unlikely to improve significantly next year given weak demand in China and potential tariffs following the election of Donald Trump, they added.
Analysts at Jefferies and ODDO BHF said more details were needed to understand how VW’s management plans to achieve the announced spending of 15 billion euros ($15.61 billion) a year.
The cost impact of the deal won’t become apparent until after 2025, and that’s just the beginning 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 were down 2.39% at 86.68 euros by 1051 GMT in Frankfurt.
Shares of German peers BMW ( ETR: ), Mercedes-Benz ( OTC: ), major VW shareholder Porsche Automobil Holding and Porsche AG fell 0.9% to 1.7%.
Volkswagen shares have fallen more than 20% this year and are trading around their 2010 level.
($1 = 0.9610 EUR)