Markets are relatively calm, with low volatility resulting from anticipation for significant events this fall. We do not anticipate significant fluctuations in key market instruments this Tuesday. The JOLTS survey for September, which provides a current snapshot of labor demand in the US, will be a key piece of macroeconomic data to watch for. Following the trading session, Alphabet will disclose its results. In the coming days, Meta, Amazon, Apple, and Microsoft will present their results. Disturbing reports are emerging from Volkswagen; despite this, the DAX is poised to reach new historical highs today. Gold is demonstrating strength, on the cusp of reaching its all-time high (ATH) level.
While stock market indices in the US and Europe (primarily the DAX) are at historical highs, this does not mean that all companies are experiencing a period of “prosperity.” Volkswagen, an automotive icon in Germany and beyond, is facing a growing array of challenges, particularly in terms of producing and selling electric vehicles in the US and Europe. A significant problem is the mass return of nearly 100,000 ID.4 electric SUVs in the US. While a door malfunction that could lead to it opening while the vehicle is in motion may seem trivial, it is undoubtedly causing sleepless nights for the company’s top management. As a result, VW was forced to halt production of this model at its factory in Chattanooga, Tennessee, leading to the loss of around 200 jobs. This situation could persist until the beginning of 2025.
The situation seems to be even worse in Germany. The group is considering restructuring, which would likely involve the closure of three factories. The expected consequences are layoffs for thousands of employees and reductions in wages. This decision forms part of a larger strategy. Drastic measures are needed for the company to function in a dynamically changing world. VW plans to focus on more profitable sectors. Apart from manufacturing costs, there is high competition, primarily from China.
These challenges reflect the difficulties a global automotive corporation renowned for its strength and stability is facing. VW must adapt to changes, which will inevitably result in a slowdown. However, this is the only way for the company, in the long-term perspective, to generate substantial growth and maintain its position as a global leader.
VW’s share price has been on a downward trend since Q1 2021, decreasing by more than 60% from its peak determined nearly 3.5 years ago. Last week’s quotes marked lows equivalent to those of August 2020.
Łukasz Zembik, Oanda TMS Brokers
Source: https://ceo.com.pl/dax-blisko-rekordu-alphabet-i-giganci-technologiczni-raportuja-volkswagen-zmaga-sie-z-wyzwaniami-61281
