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In the first half of 2024, a notable decrease in profits was observed among German automakers, including Volkswagen, BMW, and Mercedes-Benz. This decline can be attributed to several factors, including the ongoing depreciation of the yen in Japan and the uncertain future of the internal combustion engine, as well as home-made problems such as expensive software errors.
The operating profit (EBIT) for these automakers in the first half of 2024 was 25.9 billion euros, a 18% decrease from the previous year. However, in the medium term, the outlook for Volkswagen's stock shows potential for recovery, according to updated projections.
In contrast, BMW managed to achieve an operating margin of 6.1% in its automotive business in the first half of 2025, although this was below its strategic target. The overall DAX automotive sector recorded a record-high operating profit before interest and taxes of 8.6 billion euros, a 9% increase compared to the previous year. Specific figures for Mercedes-Benz or Volkswagen's operating profits for this period were not detailed in the available data.
The global car market has seen a decrease in profits, according to a study by the auditing and consulting firm EY. Worldwide, the profit before interest and taxes (EBIT) for the 16 largest automakers was almost 8% below the previous year's level at 80.4 billion euros. Interestingly, only automakers in Japan were able to achieve a solid profit and sales increase in the double-digit range.
The current economic situation is weak and consumer purchasing power is low, according to EY market observer Constatin Gall. As a result, he expects cost-cutting measures on a broad front in the auto industry.
Investors should continue to exercise patience for Volkswagen stock, as once the problems in the supply chain are overcome, the future may become clearer. The Canadian bank RBC has lowered its target price for Volkswagen stock from 137 to 131. Despite this, the stock rating for Volkswagen remains 'Outperform'.
It's worth noting that the CEO and majority shareholder of the publisher Börsenmedien AG, Mr. Bernd Förtsch, as well as the managing editor-in-chief, Mr. Frank Pöpsel, both have positions over the financial instruments of Volkswagen that could benefit from the potential price development.
Recently, Tom Narayan, in a study released on Monday, suggested a significant recovery in the second half of the year for the VW group without Porsche. This optimistic outlook could provide a glimmer of hope for Volkswagen's future profits.
In conclusion, while the first half of 2024 saw a decrease in profits for German automakers, the outlook for the second half of the year and beyond remains uncertain due to various industry challenges. Investors are advised to stay informed and patient as the situation develops.
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