Trading The Auto Industry: What To Know

Trading the auto industry and including it in a portfolio can be quite a task for a trader these days. Ever since the end of the pandemic era, the auto industry that was greatly affected by the lockdown consequences has not recovered. The reasons behind the struggle are no secret as a great part of the car industry seems to be influenced by higher than average interest rates and troubles in the supply and demand chain.

What has made the business conditions even worse for some popular brand names and car industry leaders is the shift to EV car production which is not as easy as it seemed to policymakers.

In this article we will see how some of the most famous car industry firms react to the new environment as some of their moves could impact your auto industry trading plans.

Volkswagen Struggles, Launches Venture With Rivian

Volkswagen, one of the largest car manufacturers worldwide and a significant member of the auto industry, has struggled to adjust to the new EV era. As the German economy is on the brink of recession for many months now due to high energy costs as well as other factors, the German manufacturer faces additional problems as its offering does not seem to convince consumers who turn to other companies to purchase their vehicles.

Volkswagen management announced that it intends to close at least three manufacturing plants, cut tens of thousands of jobs, and reduce pay by 10% for remaining employees.  In addition, the company said that all remaining plans would be downsized which could result in outsourcing parts’ production to external vendors.  

Weak demand for internal combustion engine (ICE) cars and a range of EV cars that is on the backfoot against Chinese competition have forced Volkswagen to issue its second profit warning in less than three months. It should be noted that the German company has never shut down a plant in its 87 years of presence in the country.

In the meantime, Volkswagen plans to launch updated versions of its ID models starting from 2026. VW R&D boss Kai Grünitz told reporters that the ID2all concept will be the start for this new VW era “because customers will see there has been a change, and a much bigger change than expected.” The German manufacturer also announced the launch of a joint venture with Rivian, a US-based EV maker that is struggling financially. The venture aims to provide Volkswagen with EV-related tech that would enable the company to improve its vehicle offering.

Economic Headwinds Force Ford To Lay Off Personnel

Ford is another large car manufacturer that has faced economic headwinds in the last two years and struggles to adjust to the new industry conditions in regard to EV vehicles. For this, Ford announced plans to cut its workforce by 4,000 in Europe by the end of 2027, with the majority of employees going in Germany. According to a report by Euronews, “the job reductions, which will account for around 14% of the company's total European workforce."

Dave Johnston, Ford's European vice president for transformation and partnerships, said in a statement: "It is critical to take difficult but decisive action to ensure Ford's future competitiveness in Europe. The global auto industry continues to be in a period of significant disruption as it shifts to electrified mobility".

Ford’s CFO John Lawler wrote a letter to the German government asking for a clear policy agenda that would spur the auto industry’s growth. Lawler said: “What we lack in Europe and Germany is an unmistakable, clear policy agenda to advance e-mobility, such as public investments in charging infrastructure, meaningful incentives to help consumers make the shift to electrified vehicles, improving cost competitiveness for manufacturers and greater flexibility in meeting CO2 compliance targets.”

Nissan Struggles In US And China Markets

Earlier in November, Nissan’s management announced that it would cut 9,000 jobs and 20% of its global manufacturing capacity as part of a cost reduction plan. The Japanese automaker and one of the strongest member of the Japanese auto industry, attributed the cuts to a sales slump recorded in the US and Chinese market in the last year.

The lack of hybrid cars offering in the American market as well as Nissan’s inability to counter BYD’s growth in China seem to make Nissan’s recovery a difficult task. In contrast with fellow Japanese Toyota, Nissan failed to see the potential of selling hybrid cars in the US market as its CEO Makoto Uchida told journalists.

Apart from cutting its production capacity by 20%, Nissan has vowed to reduce vehicle development lead time to 30 months and increase collaboration with partner manufacturers including Renault and Mitsubishi Motors.

BYD Gains Ground In Global Car Market

In dire contrast to the automakers mentioned earlier in the article, the Chinese BYD enjoys an upward trajectory thanks to a line of new car models, mostly EV, which seem to be in line with drivers’ needs and purchasing power.

BYD claims to offer “the most high-tech vehicles at reasonable prices.” Whether this is true or not only deep analysis would be able to confirm. However, it is true that BYD has come a long way in the last three years, starting from a relatively unknown Chinese brand name in the local auto industry to become one of the largest and popular car makers in the world. BYD was just a phone battery maker before entering the EV car market in 2008, partially helped by Warren Buffet’s investment funds that reached at the time over $200 million. In 2022, BYD surpassed Elon Musk’s Tesla as the largest EV automaker with a production almost double the size of the US company’s.

On October 30th, BYD announced that its revenue for the three months ended Sept. 30 came in at 201.12 billion yuan ($28.24 billion), up 24% on a year-to-year basis. The figure exceeded Tesla’s revenue of $25.18 billion reported for the same period. This was the first time that BYD surpassed Tesla in the history of the two companies. One out of two vehicles sold by BYD were hybrids while Tesla sold only EV vehicles.

According to a report published by Chinese media, BYD said it will launch a new generation of blade batteries in 2025. Analysts suggest that the so-called Blade Battery is a less bulky lithium-iron-phosphate battery with BYD executives mentioning that it is going to be safer than other market alternatives and will not catch fire.

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When you open a live account with Admiral Markets, you gain access to an extensive selection of assets, including Volkswagen, Stellantis, Ford, Tesla, Rivian,Toyota and other carmaker shares.

Trading currency pairs and CFDs on several asset categories requires a solid foundation in market principles. For newer traders, learning through educational resources like e-books, guides, and webinars is valuable.

Learning to use tools such as stop-loss and take-profit orders helps manage trading risks, building confidence and control in a fast-paced market.

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.