After a 30% Plunge This Year... "No Longer a Blue Chip": Humiliation for Europe’s Largest Automaker

Volkswagen Removed from Euro Stoxx 50 Index After 15 Years

Squeezed by Chinese Competition, Restructuring, and Slumping Share Price

Volkswagen, Europe’s largest automaker, has suffered the humiliation of being removed from the Euro Stoxx 50—an index of leading blue-chip stocks in the eurozone—for the first time in 15 years. The reasons cited include intensifying competition from Chinese companies, sluggish sales, and the burden of costs stemming from large-scale restructuring. However, some see this as a symbolic event highlighting the broader crisis facing the European automotive industry.

According to the Financial Times (FT) and other sources on September 21 (local time), index operator STOXX announced that, starting from the day's trading session, Volkswagen and Dutch information services firm Wolters Kluwer were removed from the Euro Stoxx 50. They have been replaced by Nokia, a Finnish telecommunications company, and Engie, a French energy company. This marks the first time Volkswagen has been excluded from the Euro Stoxx 50 in 15 years since 2011. Volkswagen was first included in the index in 2000, but was temporarily excluded from 2010 to 2011 as a result of the aftermath of the global financial crisis.

Volkswagen Logo. Reuters Yonhap News.

Behind Volkswagen’s removal are factors such as prolonged stock underperformance and restructuring issues. Despite a recently finalized large-scale restructuring plan, Volkswagen’s share price has fallen by around 30% just this year. Compared to the 2021 peak, the current share price is less than a quarter of its former value. The FT noted that this is the lowest level in 16 years and analyzed that "market concerns about restructuring are reflected in the currently low corporate valuation."

Volkswagen is seeking to restore profitability through large-scale restructuring. However, the burden of restructuring costs is putting further pressure on its earnings. Earlier this month, management secured supervisory board approval for the largest restructuring plan in company history, which increases the planned staff reductions from 50,000 to 100,000. However, on September 18, the company sharply lowered its 2024 operating margin forecast to a maximum of 1%, down from the previous range of 4.0-5.5%, citing additional restructuring costs and sluggish performance in the Chinese market.

The intensity of restructuring is expected to increase further. On September 21, at an employee meeting held at Volkswagen’s headquarters in Wolfsburg, Germany, CEO Thomas Schaefer stated, "I had hoped the measures agreed for 2024 would be sufficient, but they were not," and announced that the company would once again strengthen its cost-saving and profitability improvement programs.

Reuters reported that Volkswagen faces a combination of pressures, including excess production capacity in Europe and tariffs imposed by the United States. However, there are concerns that these challenges are not unique to Volkswagen, but are indicative of a broader issue across the European automotive sector. The FT pointed out that the rapid growth of Chinese companies, leveraging price competitiveness, is intensifying a sense of crisis throughout the European auto industry.

In fact, Stellantis, the parent company of brands such as Fiat and Peugeot, was also excluded from the Euro Stoxx 50 last year. With Volkswagen’s removal, only Ferrari, BMW, and Mercedes-Benz remain as automakers in the index. Michael Tyndall, head of global automotive research at HSBC, told the FT, "Stock prices are being suppressed by a perception that the entire industry is facing existential risks."

Volkswagen maintains that exclusion from the index does not change the company’s fundamental competitiveness. The company stated that it expects restructuring to improve financial performance and aims to be reincluded in the Euro Stoxx 50 in the medium term.

This content was produced with the assistance of AI translation services.