(Updated: Xetra prices, UBS comment on VW)
FRANKFURT (dpa-AFX) - Investors in the automotive sector breathed a sigh of relief on Thursday following US President Donald Trump's reversal on tariffs amid the Greenland dispute. Trump unexpectedly de-escalated the conflict over the Danish territory and also withdrew his threat of punitive tariffs against eight European countries. After tariff fears had recently pushed the auto sector index to its lowest point since mid-October, the index led the broad market recovery with a gain of two and a half percent.
Adding further support on Thursday, Volkswagen Group reported positive news regarding cash flow. This drove VW shares up by more than five percent. Shares of premium automakers BMW, Mercedes-Benz, and Porsche AG also gained, rising by as much as 2.5 percent. Commercial vehicle manufacturers Traton and Daimler Truck saw increases of up to 1.5 percent.
Across the broader market, Trump's remarks at the World Economic Forum in Davos brought relief, even as investors await further details. In his pitch for Greenland, Trump softened his stance: he ruled out the use of force and later announced that, during a meeting with NATO Secretary General Mark Rutte, a framework for a future agreement had been established. Market observers once again referred to the so-called "Taco Trade," in which investors bet that Trump initially adopts a tough negotiating position before softening his stance.
Meanwhile, VW impressed after the market closed the previous evening with statements about its cash flow, which was surprisingly strong in its industrial core business in 2025. The so-called net cash flow in the automotive segment, which also includes truck and bus operations, amounted to around six billion euros—one billion more than the previous year. Volkswagen itself had forecasted a break-even result. Experts noted that this figure was also well above consensus estimates.
Patrick Hummel of Swiss bank UBS sees the cash flow development as evidence of a more disciplined investment policy. He also mentioned positive cash flow comments for 2026, which dispelled concerns that the Q4 result could be attributed to mere timing differences. Combined with operational developments, he believes VW shares can continue to stand out positively from the competition for now.
According to Harald Hendrikse of Citigroup, the cash flow surprise is due not only to lower investments but also to better management of working capital. According to the industry expert, this has long been a source of hope. The announcements now provide some proof that it is working./tih/ag/mis
