Morgan Stanley: Volkswagen is seen as a relative winner among European mass-market car manufacturers.

Morgan Stanley analysts wrote that in the challenging European automotive market for mass-market manufacturers, Volkswagen is emerging as a relative winner. They added that the continuous launch of new products between 2025 and 2027, cost reduction measures aimed at saving over 15 billion euros annually, and lower capital intensity, are all beneficial for the company. "After ten years of high spending, this will ultimately gradually improve free cash flow." While structural profit margin pressure from Chinese competitors limits their upside potential and keeps their return on equity below previous peak levels, Volkswagen's strong balance sheet, improving free cash flow, attractive dividend yield, and valuation make it Morgan Stanley's top pick among European mass-market manufacturers. Morgan Stanley continues to favor premium peers structurally, with Mercedes-Benz and BMW being the only manufacturers rated as "overweight." Volkswagen's stock price dropped by 0.2% to 102.60 euros.