A potential stock plunge for automakers such as Volkswagen and Mercedes-Benz could be imminent due to this specific factor.
In the ever-evolving world of automotive stocks, UBS, a leading financial services company, has released its analysis, offering a mixed outlook for some of the industry's key players.
UBS analyst Patrick Hummel has revised his earnings estimates per share for 2025 by 15 to 20 percent on average for several automakers, including Volkswagen AG and Mercedes-Benz. This downward revision reflects Hummel's concerns about the medium-term outlook for the industry, which he believes may be impacted by challenges such as electric car sales and growing competition from China.
Recent months have seen profit warnings from both Volkswagen and Mercedes-Benz, causing their stocks to plummet. UBS expects this trend to continue, with Hummel predicting a deterioration in the industry's outlook in the medium term and not ruling out further profit warnings.
Despite this gloomy forecast, UBS maintains a buy recommendation for Mercedes-Benz, setting a price target of 84 euros. However, the story is different for Volkswagen, where UBS recommends a "Hold" rating with a price target of approximately €92. This suggests a slight downside of about -7.46% from current levels. UBS reaffirmed this Hold rating in late July 2025, indicating expectations of relative stability without significant upward or downward movement in the near future.
The overall analyst consensus for Volkswagen AG is also "Hold," reflecting cautious optimism with some analysts noting potential for future growth and stability grounded in Volkswagen's strong recent revenue performance and dividend yield of about 3.79%. The average price target from 12 analysts tracked by TipRanks is around €112.15, suggesting some upside potential, but UBS remains more conservative with their €92 target specifically.
On a more positive note, UBS sees Porsche AG as one of the few automakers that could trend towards earnings growth by 2025. UBS recommends buying Porsche AG with a price target of 87 euros.
It's important to note that the managing editor, Mr. Frank Pöpsel, and the CEO and majority shareholder of the publisher Börsenmedien AG, Mr. Bernd Fötsch, have positions in the financial instruments mentioned in the publication or related derivatives.
Investors should weigh this cautious UBS view against more bullish forecasts and monitor the financial results and market conditions of these automakers going forward. Expect price fluctuations in the coming year for Mercedes-Benz, and Volkswagen's stock is the only one UBS recommends selling in the sector, along with Volvo Cars.
Investors may want to reconsider their strategies in the stock-market, with UBS suggesting a sell for Volvo Cars and a "Hold" rating for Volkswagen, while recommending buying Porsche. The finance industry's concerns about the medium-term outlook for the automotive sector, as expressed by UBS analyst Patrick Hummel, are rooted in challenges such as electric car sales and growing competition from China.
