FRANKFURT/MAILAND/NEW YORK (dpa-AFX) - Auto stocks, which got off to a good start in the new year, suffered a setback on Friday. The European sector index fell 0.7 percent on Friday, finding itself at the bottom of the sector overview. Traders justified the subdued mood for the industry in particular with the new price cuts of the U.S. electric car pioneer Tesla in China. Its shares extended their recent losses in pre-market U.S. trading and fell by more than 5 percent.

In Germany, shares in Volkswagen (VW), BMW and Mercedes-Benz lost between 0.8 and 1.5 percent. The German benchmark index Dax, on the other hand, hardly moved from the spot. In Milan, Stellantis shares fell 1.3 percent.

The second price cuts by Tesla in a short period of time, according to stock market experts, clearly indicate that demand is still sluggish. And that in a market for which expectations of a sweeping recovery in the wake of the Corona easing were high. That expectation could prove deceptive in the end, one trader said.

Tesla is also facing increasingly strong domestic competition in China from the likes of BYD, Xpeng and Nio. Skeptical analysts such as Bernstein expert Toni Sacconaghi estimate that the U.S. electric maker could face problems with demand and factory capacity utilization as it faces tougher competition in its markets. China and the U.S. remain the company's biggest markets, and its European plant in Grünheide, near Berlin, is currently ramping up production.

Fitting into the bleak picture, a stubborn chip shortage and supply chain problems in the auto industry have particularly hurt VW in the U.S. market in 2022. In the fourth quarter, the company sold 22,303 cars with the VW logo to U.S. customers - a 20.5 percent drop from the same period last year.

Volkswagen's sales figures were exceedingly disappointing, one dealer said. That was all the more true, he said, because industry-wide sales in the U.S. auto market were up in the final quarter.

One bright spot for VW was the ID.4 electric model, where U.S. sales increased significantly in the final quarter. However, the e-car is not yet contributing much to volume./la/bek/mis