Germany’s Auto Kings Clash: Which Stock Deserves Your Money in 2025?

This week, we’re shifting gears into the automotive industry to compare two German giants: BMW and Volkswagen. Both are household names with global influence but they’re in very different lanes. One is a luxury pioneer focused on precision; the other is navigating a massive EV transition while managing legacy costs. Buckle up.

Industry Overview

In 2025, the global auto sector is under intense transformation. The electric vehicle (EV) wave continues gaining momentum as governments tighten emissions standards and consumers demand cleaner, smarter transportation. However, traditional ICE (internal-combustion-engine) vehicle demand has softened amid rising interest rates and inflation. Supply chain stability is improving post-pandemic, but geopolitical tensions and component constraints remain. Simultaneously, the rise of software-defined vehicles offering OTA (over-the-air) updates and autonomous driving, reshapes long-term competitive dynamics. Chinese automakers are also closing the gap, adding price and tech pressure in Europe and the U.S. As a result, automakers must juggle EV investments, dealer network optimization and legacy asset management, all while protecting margins and positioning for a mobility-led future.

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BMW AG (ETR: BMW)

Founded in 1916 and based in Munich, BMW is a benchmark for luxury and driving excellence. Its portfolio spans the 3-, 5-, and 7-Series sedans, performance M models, electric i-Series, plus SUVs. BMW continues to prioritize both combustion and electric vehicles, striking a balance between brand heritage and innovation.

Recent stock performance:
As of July 2, 2025, BMW (BMW.DE) closed at €79.08, up 5% on the day after bullish Q2 guidance and strong U.S. sales. Year-to-date, shares are up ~3%, outperforming many auto peers. Over the past 12 months, BMW rose from low €60s, buoyed by consistent sales, 178,499 vehicles in Q1 (+1.6%) and renewed confidence in its ability to manage ICE-to-EV transition. The stock now trades ~34% below target valuations, offering potential upside.

BMW reaffirmed its 2025 financial outlook, targeting ~5–7% operating margin and stable earnings despite tariff uncertainty. U.S. SUV and 2-Series demand surged (+79% for 2-Series in Q2), showcasing underlying strength. Though EV sales dipped 21% due to raw material pricing, BMW's diversified portfolio and margin discipline reduce downside risk.

3 reasons to consider BMW:

1. Balanced EV Strategy: Maintaining ICE strength while expanding EV lineup.

2. Value & Dividends: Trades at a discount with solid yield.

3. Resilient U.S. Market: Strong sales performance and premium brand equity.

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Volkswagen AG (ETR: VOW3)

Founded in 1937 in Wolfsburg, Volkswagen is Europe’s largest automaker, with brands including VW, Audi, Porsche-well kinda, Škoda and more. “New Auto” strategy focuses on EV dominance, with investments in six battery plants and 30+ EV models by 2030. But the company is burdened by debt (~€156 billion), regulation and legacy costs.

Recent stock performance:
As of July 2, 2025, VW (VOW3.DE) closed at €93.45, up 2% after bouncing from its 200-day moving average. Shares are up ~4% YTD, outperforming peers, though the valuation is low (~3.7× P/E), reflecting deep value amidst execution risk. VW proposed a €6.30/share dividend at its May AGM, signaling confidence.

Q1 2025 revenue hit €88.3 billion (vs. €86.3 billion est.), but EPS disappointed at $0.38 vs $0.42 expected. The auto group sold ~2.1 million vehicles (+0.9%), while EV deliveries in Europe doubled, highlighting a rapid shift. Five-year cost-cutting plans and EV partnerships (e.g., Rivian $1 b investment) support long-term growth.

3 reasons to consider Volkswagen:

1. EV Power Play: Massive electrification bet.

2. Deep Value: Strong dividend yield and low valuation may attract value seekers.

3. Portfolio Diversification: VW, Audi, Porsche cushion against single-brand risks.

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SPOILER ALERT!

Here’s my personal take:

BMW blends heritage, innovation and a pragmatic EV approach which is ideal for investors seeking stable growth with upside. The stock rallied on strong sales in North America and solid forward guidance and remains undervalued relative to fundamentals. With achievable margins and EV traction, BMW offers a compelling risk-reward profile.

Volkswagen is a bold contrarian play, heavily discounted and EV-all‑in. If VW successfully executes its “New Auto” strategy and manages labor/cost burdens, returns could be massive, especially with its dividend safety net. But risks are real starting from debt obligations to regulatory exposure and execution lag. VW demands conviction and patience.

Bottom line: For reliability, brand strength and margin stability BMW is the pick. For value hunters and EV believers willing to ride out volatility VW offers asymmetric upside.

For me, the balance of luxury, earnings quality and undervaluation tips the scale toward BMW. But watching VW’s EV execution will be fascinating and potentially rewarding. This is the reason why I have them both in my portfolio.

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EVERY FRIDAY: STOCK COMPARISON CHART

I post a new side‑by‑side breakdown each Friday. Subscribe for timely insights and share with fellow auto- and stock-watchers.

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HERE ARE THE 1‑YEAR DAILY CHARTS:

BMW AG (ETR: BMW)

Volkswagen AG (ETR: VOW3)

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If you had to pick one today—BMW or VW—which would it be? Drop your thoughts in the comments. And if you missed it, check last week’s Adidas vs Under Armour comparison.

Have a great day and Make | Things | Happen

Dennis