Germany’s Merz vows to stay despite ‘disaster’
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What is the FT News Briefing’s opening overview for today’s headlines?
There are countless voices competing to break the news and tell you the what, the who, and the where. But to get a true understanding, you need to know the why. With over 700 of the best journalists in the world, the FT goes deeper to help you see the whole story and truly understand why it happened, why it's important, and why it matters. Subscribe to the FT today and save money on a standard annual digital subscription. description until october twenty eighth. We'll have a link to that in our show notes. Good morning from the Financial Times. Today is Monday, September twenty first, and this is your FT news briefing. Germany's ruling party suffers a self-proclaimed disaster, and Volkswagen gets booted off Europe's most important stock market index, plus John Osoft's centrist pitch to Democratic voters.
I'm Josh Gaberdoyon and here's the news you need to start your day.
German Chancellor Friedrich Meritz has vowed to stay in office and press on with economic reforms. That's despite big losses by the conservative Christian Democratic Union Party yesterday. The CDU lost in two new regional elections. The hard right alternative for Germany Party is set to win a majority in the state of Mecklenburg for Pomeran. Meanwhile, in the city state of Berlin, The CDU is projected to come in second behind the hard left Delinke party. In a speech after the polls closed, Meritz called his party's performance quote a disaster.
Iconic German car maker Volkswagen is also facing bad news. They've fallen off Europe's most important blue chip stock market index for the first time in 15 years. Shares in the company behind the Beatle have been in a tailspin, and now Volkswagen is set to be removed from the Eurostox 50, which tracks the Eurozone's leading publicly traded companies. Kana Inagaki reports on industry for the FT. She joins me now to discuss. Hi, Kana. Hi, Josh. So how bad are things at VW?
I mean Volkswagen is among the most cheaply traded global car stocks and its shares have fallen more than three quarters from the levels they reached during the twenty twenty one stock market rally. So the stock has been under pressure and obviously there are various factors that are driving it. The European car industry in general has been under a lot of pressure from Chinese competition, and the company is undergoing a historic restructuring that involves around hundred thousand job cuts, mainly so that the company can stay competitive in this extremely difficult environment for the whole automotive industry.
I mean, you mentioned European car makers are facing a lot of pressure across the board, but Volkswagen in particular has really been taking a beating. How did this happen?
Yes, so there are various factors that are leading up to the current challenges. All of the European car makers, including Volkswagen. Are under pressure from the rising competition posed by, you know, Chinese competitors like BYD. Volkswagen is particularly exposed because um the group also includes Porsche, which has seen tumbling sales in China, uh, which is also the reason why late on Friday the company also announced another write down totaling around ten billion euros, mainly because of the decline in sales in China.
So I mean they have these consumer pressures. What about on the capital side with this Eurostocks fifty exit? How is that gonna affect Volkswagen?
So I think it will add more pressure to Volkswagen stock. There are around thirty exchange traded funds, ETFs, with a combined market value of about fifty-nine billion euros that replicate the Euro stocks fifty. So that means that some investors will be forced to sell stakes in Volkswagen once Volkswagen falls off the index.
Okay, and I know that Volkswagen has said it's aiming to re enter the Eurostocks fifty as it restructures the company, but going back to the competitiveness question, which seems to be at the heart of this, what would a European car maker like Volkswagen need to do to catch up with Chinese rivals?
I think some of these car makers are already taking these steps, but they need to become much faster in developing their vehicles.
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Chapters
4 chapters
1
What is the FT News Briefing’s opening overview for today’s headlines?
0:00–6:37
2
Why did German Chancellor Friedrich Merz call the recent election results a ‘disaster’ and vow to stay in office?
6:37–10:11
3
How did Volkswagen get removed from the Eurostoxx 50 after 15 years on the index?
10:11–12:23
4
What factors are driving Volkswagen’s stock plunge and the broader European car‑industry crisis?
12:23–12:50