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Volkswagen AG

Consumer Cyclical

Research

  • Sell by alpha (23/10/2023)
    • 80.00 -22.44% by 01/04/2024

    Volkswagen is a German carmaker delivering >8 million cars globally of which around 600k electrical vehicles (7%). Global car sales is 25% below all-time high from 2018 due to the Diesel-gate which caused a drop from 8% to 6% in global market share. It looks like the company is recovering being #1 BEV brand in Europe and with 7% global market share.

    At 4x PE ratio (TTM) and 7% dividend the company looks attractive, but the economic climate is a risk with €55B financial lease on the balance sheet. Market conditions are worsening; with Chinese competition and risk for a down-turn in sales. For Q3'2023 management warns for lower margins due to higher material costs.

    I stay on the side-line and follow developments as potentially interesting investment for the longer-term EV trend.

  • Risks (2)
    • Automotive industry

      The automotive industry is capital intensive with low margins. Warren Buffet thinks there is no moat and it is an industry to stay away from (Berkshire shareholders meeting 2023).

      11/05/2023 by ALPHA
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      1
    • Competition

      With upcoming brands from China the competition in the BEV segment is increasing. In Europe Volkswagen countered the Tesla domination very well, but there are new brands with new business models entering the market. The growth strategy for the Chinese market will be in tough competition with local brands.

      04/05/2023 by ALPHA
      0
      1