The year 2025 is proving particularly difficult for the European automotive industry, especially for two of its most iconic brands: Porsche and Mercedes-Benz. Between persistent weakness in China, a complex electric transition, regulatory pressure and customs duties, manufacturers are navigating a turbulent environment that is also weighing on investor sentiment.
In this context, Christina Carlsten, Analyst and Fund Manager at Piguet Galland, shared her insights in the Tribune de Genève, commenting on the sector’s key challenges and the conditions that could enable an equity market recovery.
Porsche, long a flagship of the Volkswagen Group, has seen its shine fade. Few would have imagined that barely three years after its IPO in September 2022, its share price would fall by around 50%, making it one of the industry’s most disappointing performers. The brand posted close to one billion euros in losses in the third quarter. These results stem in part from a strategic realignment accompanied by exceptional charges, including shutting down in-house battery production and shifting focus back to hybrid and combustion engines amid softer-than-expected demand for electric vehicles. Weakness in the Chinese market and sluggish demand in Germany have also weighed on performance.
Mercedes-Benz, for its part, continues to display one of the strongest operating margins in the sector, yet global deliveries have fallen by 12% year-on-year, while rival BMW remains stable. The energy transition—caught between taxes targeting combustion engines, high electrification costs and hesitant consumer demand, creates a complex environment in which each strategic decision carries significant weight.
“Porsche is emerging from a transition year best forgotten, and 2026 will likely be similar. Much hope now lies with the new CEO, Michael Leiters, formerly of McLaren and Ferrari, who takes office on 1 January.”
Christina also highlights the importance of potential regulatory easing:
“Something is shifting: after two years of downward earnings revisions, investors are beginning to anticipate that the bottom may be near — especially if the crucial announcements expected on 10 December from the European Commission are not unfavourable,” notes Christina Carlsten.
A potential revision of the 2035 deadline for the end of combustion engines could offer European manufacturers strategic breathing room, particularly for hybrid models. Markets, which had stopped believing in such an outcome, are beginning to price in this possibility.
Upcoming decisions from the European Commission will therefore be decisive not only for the sector’s trajectory but also for the manufacturers’ ability to restore profitability.
Read the full article in Tribune de Genève (french only)