FRANKFURT (dpa-AFX) - Investors in the auto sector breathed a particular sigh of relief on Thursday following U.S. President Donald Trump's reversal on tariffs in the dispute over Greenland. On Wednesday, Trump unexpectedly deescalated the conflict regarding the Danish territory and withdrew his threat of punitive tariffs against eight European countries, which were set to take effect on February 1. Recently, tariff fears had pushed the auto sector index to its lowest point since mid-October.
Adding further support on Thursday, Volkswagen Group delivered positive news regarding its cash flow. This led to particularly strong gains for VW shares on the Tradegate platform in the morning, rising by 4.5 percent. Shares of premium automakers BMW, Mercedes-Benz, and Porsche AG also saw significant increases of up to 3.2 percent.
Trump's statements are also bringing relief to the broader market, although investors are still waiting for further details. Trump made an about-face by first ruling out the use of force in his bid for Greenland and then announcing that, during a meeting with NATO Secretary-General Mark Rutte, a framework for a future agreement had been established. Market observers are once again referring to the "Taco Trade," where investors bet that Trump will initially take a hard line in negotiations, only to soften his stance later.
Meanwhile, VW impressed after the close of trading on Wednesday evening with statements about its cash flow, which turned out to be surprisingly high in the automotive division for 2025. The so-called net cash flow in the division, which includes not only the car business but also trucks and buses, amounted to around six billion euros—one billion above the previous year's figure. Volkswagen itself had forecast a break-even result. Experts also saw this number as significantly above consensus estimates.
According to experts, the cash flow surprise is due to lower investment expenditures as well as improved working capital management. Citigroup analyst Harald Hendrikse noted that this has long been the hope. The announcements now provide some evidence that this approach is working./tih/ag/jha/
