Volkswagen share price has come under pressure this year as the company continues to face an existential crisis. It ended the week at €76.52, down by nearly 50% from its highest point during the pandemic. Consequently, the index has been kicked off from the prestigious Stoxx 50 Index.
Why Volkswagen share price is slumping
Volkswagen, one of the top automakers globally, has moved from one crisis to another in the past few years. It was forced to pay billions of euros during the Dieselgate scandal that battered its reputation globally.
Now, the company is in a battle for survival as competition in Europe and China heats up. Most of its challenges are in China, a country where it once had a commanding presence. Today, it is contending with rising competition from some of the fastest-growing companies in the industry, like BYD, Nio, and Xpeng.
The company is also battling the rising cost of doing business as Donald Trump’s war against Iran continues. Prices of key inputs, including labor, copper, rubber, and other metals, have continued to rise this month.
It is also contending with geopolitical issues, including the relationship between the United States and Europe. Under President Trump, it is now paying a higher tariff for all vehicles it ships to the United States.
It is against this backdrop that the stock has plunged, forcing out of the Stoxx 50 Index that tracks the biggest companies in the continent. Moving from this index means that ETFs that track it will need to sell their shares. Estimates are that ETFs with over €59 billion in assets track the index.
Most importantly, the company has announced plans to lay off thousands of workers and even shut down some of its plants in Germany. It recently announced plans to fire 50,000 workers by 2030, a move it hopes will help it slash costs. This move faces substantial opposition in Germany. At the same time, it is calling for more layoffs at Porsche, an automaker it has a large stake in.
The most recent results showed that its revenue slipped by 0.2% in the first half of the year to €158.1 billion. Its operating profit dropped by 11.6% to €5.9 billion, while the number of units sold fell by 8.4% to 4 million vehicles. The profit decline was partly because of a change in the manufacturing of passenger cars in the US that led to the discontinuation of ID. 4. Just last week, the company slashed its 2026 profit margin outlook for the year.
Volkwagen has had a major fall from grace, with its market capitalization moving from a record high of €322 billion to €38 billion today. At some point, it was the biggest company in the world.
Volkswagen stock price technical analysis
Volkswagen stock chart | Source: TradingView
The weekly chart shows that the VW stock price has remained inside a narrow range in the past few years. It has stayed between the support and resistance levels of €69.2 and €102.60 since 2022.
The stock is now hovering near the lower side of this channel. At the same time, it has dropped below the 50-day moving average, a sign that bears remain in control. Therefore, the stock may drop further in the near term because of its Stoxx 50 removal. Stellantis shares have nosedived since its removal last year.
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