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Investing.com --Volkswagen faces a pressure-driven reset heading into 2026, after a difficult year marked by heavy restructuring charges, tariffs costs and guidance cuts but Bank of America says carmaker has room to stabilise earnings and free cash flow in 2026 through lower spending, cost cuts.
The broker said special items of €6.7bn year to date, tied to write downs and restructuring at Porsche, Audi and software unit Cariad, have combined with more than €3bn of tariff burdens in 2025.
VW has already cut its 2025 guidance twice and now expects a group operating margin of 2 to 3 percent. Excluding the special items and tariffs, BofA said VW would have met its original target of 5.5 to 6.5 percent.
Press reports in Germany have highlighted concerns that VW could face a free cash flow shortfall of up to €11bn in 2026, prompting speculation over delayed investments and deeper cost cuts to avoid strain on liquidity and any risk to its BBB plus credit rating. VW has denied the reported cash flow gap and said it still targets positive free cash flow, reiterating that its five year capex budget will not rise.
BofA cut its price objectives to €115 on VW preference shares and €122 on the ordinary shares but kept Buy ratings, saying the company has “self help” levers.
It expects VW to trim capex and R&D, pursue at least €1bn of personnel cost reductions across 2025 and 2026 and continue to lift prices in the United States.
It added that a planned disposal of the Everllence energy solutions unit, which media reports value at €5bn to €8bn, could help streamline the group.
Tariffs in the US remain a drag on Audi’s earnings and could push VW to add manufacturing capacity there, but BofA said a reasonable 2026 guidance in March could signal the start of a recovery as restructuring savings build and product delays are addressed.