The car sector celebrates the green light for Volkswagen’s plan, with the company’s shares soaring in Frankfurt

(Il Sole 24 Ore Radiocor) - The surprise, unanimous, of the new Volkswagen restructuring plan, which involves cutting a further 50,000 jobs, in addition to the 50,000 already agreed in Germany from 2024 onwards, is boosting the European car sector, which is gaining around one point across the continent.

In Frankfurt, Volkswagen shares reacted to the announcement with a surge that lifted the entire European sector. On the Milan Stock Exchange, Stellantis , whilst across the rest of Europe, Renault in Paris, as well as BMW and Mercedes-Benz Group in Frankfurt.

On Thursday evening, the supervisory board of the German carmaker voted unanimously in favour of the plan: an outcome, as Citi analysts point out, made possible solely by the support of the workforce and local politicians for the management’s plan. In a report entitled “Congratulations Volkswagen. Realism wins the day”, the US bank’s analysts congratulate “not only Volkswagen’s management, but also the works council and the representatives of the state of Lower Saxony”.

“It is a bold plan and a realistic decision for all parties involved,” adds Citi, noting that “given the competitiveness of German plants and the lack of global revenue opportunities, Volkswagen simply had no other choice”. The problems, Deutsche Bank notes, “cannot be resolved overnight, but the main concern has been overcome”.

For Db, too, the unanimous approval of the plan was ‘a big surprise’: “Virtually all the investors we have spoken to in recent days continued to regard” Volkswagen’s problems “as simply ‘unsolvable’, and scepticism about the possibility of a deal was extremely high”, the experts write. The plan, Citi notes, “will enable Volkswagen to cut costs, reduce the number (and complexity) of models and drastically reduce capital expenditure by a further 6 billion a year”. The decision will enable the German carmaker “to continue channelling capital towards the most profitable brands and models, without the need to maintain excess production capacity”.