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Research Tree provides access to ongoing research coverage, media content and regulatory news on VOLKSWAGEN AG. We currently have 61 research reports from 1 professional analysts.
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The VW brand lives in a dream world
22 Nov 16
Today’s publication from VW talks about the world after 2025 when the brand will generate an EBIT margin of 6% in an environment where VW will be at the ‘Top of Volume’. This means the brand’s vehicles will be priced at the top of all volume producers close to the premium market segment. While sales prices are already ahead of other volume producers, they are still a far cry from the prices of premium brands. Its ASP is currently around €24,000 while Audi’s ASP is in the vicinity of €38,000. The strategic plan is divided into three steps: 1) Until 2020, the core business of the brand will be restructured and numerous new ‘conventional’ vehicles (primarily SUVs) will be introduced and the margin goal is 4%. 2) Until 2025, VW intends to become the world leader in electro mobility with a margin of 6%. Simultaneously, management is again dreaming of becoming the world leader of all volume car producers and a leader in mobility services (e.g. car sharing). 3) Management expects the car market to change dramatically after 2025. As the world market leader, it intends to be a driving force in those times.
Deliveries increased in October, thank you very much China
11 Nov 16
The VW brand increased deliveries by 4.4% to 511,500 passenger cars in the last month which brought the ytd number to 4.89m, an increase of 1.0%. Except for Central and Eastern Europe (+3.0% to 19,800) and APAC (+19.4% to 291,900), deliveries fell in all other regions in October. LatAm continued to be the worst market (-36% to 22,300) followed by Nafta (-9.8% to 46,400) and Europe (-7.0% to 132,400). The rate of decline has clearly accelerated in Europe, in particular in Germany. Management blames longer contracts for employee leasing contracts for the recent fall in Germany. But the rate of decline has also increased in Nafta and LatAm. The VW-Group saw its deliveries rising by 4.7% to 870,300 in October which brought the ytd number to 8.48m, an increase of 2.6%. Again, APAC was the driving force behind these growth rates (+16% to 390,300 in October and +9% to 3.50m ytd). However, the group continued to see positive growth in Europe (+0.9% to 338,000 and +3.3% to 3.52m, respectively), but, similar to the VW brand, falling deliveries in Nafta (-4.8% to 76,600 and -1.4% to 762,400) and LatAm (-33% to 29,600 and -28% to 349,600).
Board Chairman and Audi under investigation
07 Nov 16
Braunschweig prosecutors have officially opened the case against Hans Dieter Pötsch, VW’s Chairman of the Supervisory Board. The authorities apparently found evidence that he, combined with the previous CEO Martin Winterkorn, informed the public too late about Dieselgate. Simultaneously, California Air Resources Board (CARB) has found evidence that Audi has not only used the faked VW software but that Audi’s software has also manipulated CO2 emissions of both 3L diesel and gasoline engines.
Reasonable Q3 numbers but with no further provisions
27 Oct 16
The group delivered a total of 2.49m vehicles (i.e. cars, vans, and trucks) in the last quarter (+4.2%) which gives a 9M number of 7.61m (+2.4%). However, this positive growth for the 9M is exclusively the result of a strong rise in China (+12.5% to 2.80m), i.e. excluding this number deliveries were down by 2.0% to 4.85m. One has to take into account that these Chinese deliveries are not consolidated at the revenue and operating profit level. As the ASP was only marginally up, 9M turnover fell by 0.2% to €159.9bn. The Q3 EBIT came in at €3.3bn (loss of €3.5bn last year) and the 9M number was €8.6bn (profit of €3.34bn in 9M 15). Our revenue (€158bn) and EBIT numbers (€6.2bn) were lower. However, we had included provisions of another €2.5bn in Q3, i.e. excluding that, VW’s number is lower than our projection. The ‘surprisingly reasonable’ EBIT number also takes falling R&D expenditure into account. Whereas total costs were up by 2% to slightly more than €10bn in 9M 16, the amount of capitalised R&D expenditure was raised by almost €1bn.
German High Court decision, a precedence for the VW case?
27 Oct 16
The German High Court (BGH) has decided that a car buyer can return his car to the dealer if the all-new car has an obvious fault, even if it is a negligible one. The case concerned a small dent in one of the car’s doors and the dealer offered to repair it. The court decided that the buyer has the right to give the car back as it was not in an impeccable state. In this instance, the fault was immediately visible whereas VW has delivered cars with a hidden fault. Whether this is a difference that allows VW to get away with the software cheating remains to be seen. However, it might very well be an indication that VW will not get away without any compensation to German customers.
Keep on dreaming
18 Oct 16
VW intends to increase productivity of the 30 worldwide VW-brand production plants by between 5% and 8% annually through to 2020 without closing any plants. One of the measures is to reduce the number of shifts, in particular those at weekends but also other extra-shifts. Both entitle employees to top-ups to their regular wages. VW has been talking about productivity gains for several decades, but genuine profit recoveries have rarely been achieved in the past. This is either the result of promises never having been delivered or all cost savings having to be passed on to clients. CEO Müller reiterated his intention to reduce costs throughout the infrastructure and throughout all brands. Among the topics, material input costs are to be reduced by 10% in 2017. Simultaneously, the group needs every euro to invest in the structural change of the auto industry.
09 Dec 16
Ideagen* (IDEA): Acquisition of IPI Solutions (CORP) | Lombard Risk Management* (LRM): Atos deal improves routes to German market (CORP) | Photo-Me* (PHTM): Upgrade to FY forecasts (CORP) In other news… Frontier Developments* (FDEV): ED coming to Xbox and Planet Coaster update (CORP) | LiDCO* (LID): Analyst interview (CORP) | Rude Health: Analyst interview
Product quality and management depth
07 Dec 16
Yesterday Focusrite held a capital markets day, designed to showcase the range and quality of products and introduce operational management, which shares a passion for music-making and has deep knowledge of the products. This contributes to excellent product support, software innovation and thus customer loyalty, which should sustain the company’s brand leadership.
Civil: No Reflation here, only a Race to the Bottom
05 Dec 16
The strengthening of the US dollar since the election of Trump is adding to the headwinds in the airline industry: over-capacity and falling yields. The airline industry, which is expected to generate $8bn of free cashflow in 2016 on $600bn of capital employed, needs to spend $120bn annually to maintain current delivery rates. Deferrals and down-gauging is now spreading to narrow-bodies as more and more airlines review their capex plans. We expect acceleration of seat densification as airlines look to sweat their existing fleets. We now expect deliveries to fall by 5% over 2015-18 as opposed to our previous forecast of flat growth. Aftermarket may also suffer as seat densification helps cut number of flights. This leads to reduction in our EPS forecasts for key Civil Aerospace names: Rolls-Royce, Meggitt, GKN and Senior.
Small Cap Breakfast
07 Dec 16
Creo Medical group—Schedule 1 update.. £20m raise. Expected market cap £61.2m, admission expected 9 December. ECSC—Schedule 1 from provider of cyber security services. Raising £5m. Vendor sale £0.8m. Target date 14 Dec. Expected market cap £15m. RM Secured Direct Lending - The secured direct lending fund intends to float on the Main Market on 15 December raising up to £100m