RBC Capital Lifts Volkswagen, Cuts Mercedes-Benz on Tariff and China Risks

RBC Capital shifted its stance on Germany’s two largest carmakers on Tuesday, upgrading Volkswagen to Outperform from Sector Perform while downgrading Mercedes-Benz to Sector Perform from Outperform.

The bank raised its price target for Volkswagen to €130 from €117, arguing the company is comparatively well-positioned against potential U.S. tariffs.

By contrast, Mercedes’ target was cut to €55 from €63, with analysts citing near-term worries about trade exposure and a “deteriorating situation” in China.

The divergent calls highlight the widening gap in fortunes across the German auto sector as it navigates a mix of global headwinds. 

Earlier this month, Volkswagen lowered its 2025 operating return on sales forecast to 2–3 percent from 4–5 percent, while Porsche AG, majority-owned by VW, trimmed its own forecast to just positive 2 percent from 5–7 percent. 

The adjustments were linked to a €3 billion non-cash impairment tied to Porsche’s segment within the group.

Despite the downgrade in profit expectations, RBC sees Volkswagen as more insulated than its peers from looming U.S. trade tensions. 

Mercedes, however, faces sharper exposure to potential tariff action while also contending with weakening demand trends in China, a key growth market for the luxury carmaker.