Volkswagen has fallen out of the European blue-chip list for the first time in nearly 15 years! Its share price has plummeted to a 16-year low, marking another crisis for the European auto industry.

Volkswagen is experiencing one of the most difficult moments in its modern history.

The German auto giant has been removed from the Euro Stoxx 50, the eurozone's most important blue-chip index, marking the first time in nearly 15 years that the company has fallen off this benchmark. The adjustment was made by index provider Stoxx following a routine review, after Volkswagen's share price fell by more than three-quarters from its 2021 high to a near 16-year low.

Traders warn that this forced exit will trigger a new round of selling pressure—exchange-traded funds (ETFs) tracking the Euro Stoxx 50 will be forced to liquidate their public holdings. According to Stoxx data, there are currently 30 ETFs replicating the index, with a total size of €59 billion, and more than 110,000 actively managed structured products linked to it, with sales exceeding €68 billion.

Volkswagen responded that "inclusion in an index does not change the company's fundamental strength," and insisted that the group "remains an attractive investment for investors."

Index adjustments exacerbated downward pressure on stock prices.

Volkswagen's stock price has been mired in a deep slump. Earlier this month, the company reached an unexpected restructuring agreement with the unions, and its stock price rebounded by more than 9% in a single day. However, the good times didn't last long—on Friday, the company issued a profit warning due to a €6 billion impairment charge on its Porsche stake, coupled with continued sluggish overseas markets and rising restructuring costs, causing the stock price to plummet 8.3% that day.

Michael Tyndall, senior global automotive analyst at HSBC, said, "The entire industry is facing an almost existential risk, and valuations are under pressure as a result." He also pointed out that Volkswagen's current low valuation reflects market concerns about restructuring costs.

Despite a rebound this month, Volkswagen's current market capitalization is only around €38 billion, a stark contrast to its annual sales of €322 billion. Simon Jäger, portfolio manager at German asset management firm Flossbach von Storch, told the Financial Times, "This market capitalization sends a very clear signal – how pessimistic investors are about Volkswagen."

European automotive industry collectively underperformed the index.

Volkswagen's exit is not an isolated case. Last year, Stellantis, the parent company of Fiat and Peugeot, was removed from the Euro Stoxx 50. Since then, the company's stock price has nearly halved, and it has also undergone a management reshuffle and repeatedly failed to improve its profit margins in the US and European markets.

Also leaving the index this time is Dutch information services group Wolters Kluwer. Replacing them are Finland's Nokia—the former mobile phone giant that has transformed into a data center network provider with the backing of Nvidia—and French utility group Engie. Currently, Ferrari, BMW, and Mercedes-Benz are the only three remaining auto stocks in the Euro Stoxx 50.

One executive from a rival company commented on Volkswagen's exit, saying, "It's a symbol of the times," and believed that the reputational impact of the event would far outweigh the actual outflow of funds.

German blue-chip stocks were under pressure overall.

Volkswagen's exit reduced Germany's representation in the Euro Stoxx 50 to 16, reflecting the continued pressure on large German listed companies. Stoxx data shows that over the past five years, the annualized return of the German component sub-index was 10.9%, significantly lagging behind the Euro Stoxx 50's overall return of 12.5%.

Volkswagen has been a frequent member of this index throughout its history. It first joined in 2000, two years after the index's inception, then briefly withdrew between 2010 and 2011 due to the global financial crisis, before returning and maintaining its membership ever since. In 2008, Volkswagen briefly became the world's most valuable company during a massive short squeeze.

Volkswagen stated that the restructuring will improve its financial performance and "should also have a positive impact on Volkswagen's stock price," adding that the company is aiming to "return to the Euro Stoxx 50 index in the medium term." However, the timeline for achieving this goal remains uncertain due to multiple obstacles, including declining sales, rising US tariffs, and a complex governance structure.

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