Volkswagen Stock: Tax Dispute Triggers Major Share Decline

Volkswagen's shares experienced a significant downturn on Monday, plummeting 6.0% to €92.68 in XETRA trading, primarily driven by an escalating tax controversy in India involving demands of $1.4 billion. The dramatic decline pushes the stock further away from its 52-week high of €128.60, while additional pressure stems from newly announced U.S. tariffs on Mexican imports, threatening Volkswagen's substantial manufacturing operations in Mexico. The Wolfsburg-based automaker is actively contesting the Indian tax authorities' demands, which it considers excessive, while simultaneously grappling with the implications of potential 25% tariffs on Mexican goods that could significantly impact production costs.

Financial Performance Under Scrutiny

The automaker's recent quarterly results reflect mounting market challenges, with earnings per share dropping substantially to €2.42 from €7.76 in the previous year. While revenue slightly decreased to €78.48 billion, analysts maintain a target price of €109.13 per share for 2024, despite the current headwinds. The expected dividend payout is projected to decrease to €6.34 per share, down from the previous year's €9.06, underlining the company's financial pressures amid global trade tensions and regulatory challenges.