Volkswagen AG (VOW.DE) 🇩🇪 🚘

Agree, think once (Freetrade) start listing European stocks on app would like to see Volkswagen on it. In my opinion they will be major players in the electric vehicle revolution over the next decade

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Bad news for Volkswagen. Share price barely budged:

But they also sold more cars 2019 than ever before.

BBC News - Canada prosecutors propose £110m Volkswagen fine

Cash burn.

“We’re have no sales, we have no revenue, outside of China”

“Most of our employees are technically unemployed…”

Also see the aluminium post on Commodities Megathread

FT:

Volkswagen is burning through approximately €2bn in cash per week, the world’s largest carmaker revealed, as factory closures across Europe and the Americas push the auto industry towards the worst recession in decades.

Manufacturers and suppliers around the globe are scrambling for extra credit, with Fiat Chrysler securing an extra €3.5bn, while VW, which is one of Europe’s largest employers, urged the European Central Bank to buy short-term commercial debt to help it weather the coronavirus pandemic.

The German group has already put almost a third of its 300,000 workers in the country on reduced hours, relying on the government in Berlin to plug the gap.

France’s Renault, which has seen sales almost grind to a halt, has raised the prospect of applying for state-backed loans, although chairman Jean-Dominique Senard dismissed the idea of nationalisation.

“We are reducing our expenses where possible, we are delaying non-critical projects and we can survive a few weeks or months, but not indefinitely,” Herbert Diess, VW’s chief executive, told the German TV channel, ZDF.

“We’re have no sales, we have no revenue, outside of China,” he added, “while we also have to pay out for fixed costs.”

Mr Diess’s warning comes as Moody’s predicted a 14 per cent decline in global auto sales in 2020, more than five times the drop it had initially projected as the effects of the spread of Covid-19 became apparent in February.

The forecast paints a considerably worse picture than even the 2008 financial crisis, which led to an approximately 8 per cent decline in the car market over two years.

The rating agency also put 14 key European auto parts makers under review for downgrade on Thursday, including Germany’s Schaeffler and France’s Valeo, due to what it described as “a severe and extensive credit shock”, further complicating many manufacturers’ plans to resume production in April.

Daimler, which has put the majority of its 170,000 staff in Germany on reduced hours, is also seeking €10bn in extra credit from banks, according to Bloomberg. The company refused to comment.

Earlier this week, the European industry body ACEA, which represents 16 of the top manufacturers, sent a letter to European Commission president Ursula von der Leyen pleading for more cash to be made available to the industry.

“Most of our employees are technically unemployed,” it read. “Nobody knows how long this will last. We have never experienced anything like this.”


Volkswagen, however, is yet to draw down its €20bn credit facility and is beginning to see a recovery in its most-profitable market, China. All but two of its 33 plants in the country are up and running and the company expects industry-wide car sales in China to reach 1m in March, after falling to 250,000 last month.

Link - https://www.ft.com/content/26e4cb7c-f588-4cdf-ae50-0a834e8ea57f

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I’ve always had VW cars and been a long-term shareholder even through the Dieselgate days so I’m sure VW can come through eventually ( shares obviously taking a tanking of late ). Was looking forward to seeing the electric ID.3 this year with a view to a purchase but that might have to wait.

Forget getting ID.3. VW is not a software company and the people who were running it 10 years ago are probably still with the company. Being in a car that runs on spaghetti code is not safe. Plus, because of the lack of awesome software upgrades the depreciation is likely much worse vs Teslas.

Biased news coverage worth paying attention to:

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Absolutely, but I wouldn’t underestimate VW on this one as they seem to be throwing the kitchen sink at EVs with ID.1, ID.2 and and SUV on the roadmap.

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Anyone interested in VW these days? They are committing to the largest investment in Electric Vehicles, by far. They are committing EUR80b and the next largest investment is EUR42b:

When I read about electric vehicles i keep seeing stuff about them going all in, more than the other companies.

Big fan here. It’s not been plain sailing for the ID3 which has been delayed due to software issues. The car itself works, but the new software was causing odd things to happen. This ongoing problem has resulted in the moving of exec personnel. It’s a good study in how a huge company changes direction in a short space of time, compared to a startup like Tesla which dosnt have an old supply chain to maintain.

What do you think about their long term prospects in 5-10 years compared with other established carmakers and also with the newcomer Electric vehicle companies: Tesla, Rivian, NIO

The PE is low at the moment, at about 7. The dividend yield is not too bad at around 5%. The price is quite a bit off their pre emission scandal highs in 2015.

I think one or some of the established car companies will do well out of the switch to electric vehicles, I’m looking for something to hold long term and VW looks like a decent bet.

Yes and they have been brave enough to go for it. Ford for example is clearly waiting and watching what happens in order to make the right move at much lower mass market price points. The e-golf lost VW money on each car, like early Tesla models, but as we see with Tesla the early mover was able to build huge infrastructure to take advantage of a particular forward thinking market. The ID series is designed to make money for VW. Likewise Peugeot Group has now finished its hatchback framework to compete along with the ID3 and have beaten VW to the punch in that respect, licensing out the kit to Corsa while VW has licenced to Seat, Pug releasing the e-208 first. Germany and France are pushing EVs hard, enormous subsidies are in place. I can’t see that changing as governments are unlikely to return to coal and oil fired perspectives, we are still in the early period of mass EV adoption so a good place to get in.

The other long term factor is China. The XPENG P7 is basically designed to be identical to the Tesla Model 3 but cheaper with more fancy trim and likely to do very well in left hand drive areas first. The Chinese also have the ORA mini electric at a £7k price point but wether they will appear here is not clear. The NIO models look fantastic and have early mover advantages. South Korea also has a good foothold in the European and east Asia car market and a bigger middle class.

The long term question is how much damage will it do to existing oil economies, and what will replace the tax losses? I’d say 10 years will be enough time to see what the reaction will be, and wether subsidies like free road tax and purchase grants/scrap schemes will be filtered down. There are teething problems with EVs but they will be ironed out and become seamless.

That’s my thoughts on the matter, much longer than I thought at first!

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Awesome write-up, thanks. Are you holding any VW shares or looking to get some? I think I may invest in them, I have invested in Tesla about 18 months ago and I want a bit more diverse coverage of the electric vehicle space.

VW own Porsche and Audi as well, which is a benefit. This article says VW will be the first global automaker to profitably sell electric vehicles: https://www.forbes.com/sites/neilwinton/2020/03/09/vw-will-be-the-1st-mass-market-electric-car-profit-maker-report/#1d3a05c45415

Edit: Anyone have any idea about whether to buy the VOW or VOW3 version of the shares? I don’t want to vote, just want to buy a small amount of shares.

VOW3 is more liquid and is the version which appears on the DAX ( you’ll have to go outwith Freetrade to buy it ) :slightly_frowning_face:
I’ve built up a fair few as a long term investment.

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I went for VOW3, the preferred stock. They get slightly higher dividend payout and have about 10x higher trading volume.

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@Viktor @adam

Any ETA before European shares are introduced to Freetrade? (At least gives us an idea on how long have to wait, or if to buy elsewhere for the time being. Not wanting to to lose out on potential gains in the meantime)

I don’t have any understanding of the complexities of adding other stock exchanges, but I think we are almost at the point of having most of the US & UK stocks that the majority of customers would buy. There is some big shares available on the european markets which I am sure many people would be interested to jump on board with.

Appreciate any comments / info.

@Freetrade_Admin @sampoullain Any update available?

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They will surely start with the countries that have betas, can’t leave them out?