Arno Antlitz announced that the giant restructuring program launched by VW following tough negotiations with its trade unions must be implemented in its entirety, without any backtracking or relaxation. Otherwise, failure was guaranteed. See VW limits the damage and embarks on major strategic shift.
Volkswagen has taken the historic step of halving its production capacity in Germany, where its cost structure is no longer competitive enough to compete in a saturated European market facing fierce competition from Asia. This comes at a time when the group needs to redouble its efforts to invest in its new range of electric vehicles.
The decline in sales in China, where local manufacturers have gained the upper hand, and the unpleasant surprise of US tariffs are other very serious difficulties. Taken together, these factors have caused the manufacturer's operating profit to fall by a third compared with the same period last year.
The only bright spots are the success of VW's electric range, with orders up sharply, thanks in particular to the sharp decline in consumer enthusiasm for Tesla, and sales growth in South America. These last two factors explain why vehicle deliveries are flat year-on-year.
However, the overall situation remains critical. The automotive segment saw its operating profit fall by 41%, penalized by its high-end categories, particularly Porsche and Audi. The same trend was seen in the truck segment, which together with the automotive segment accounts for two-thirds of consolidated operating profit.
Although it is undoubtedly heavily discounted both in terms of the sum of its parts—the automotive and financing divisions, Traton, Porsche, the stake in Rivian, the joint venture in China, etc.—and in terms of its equity value, Volkswagen remains clearly valued primarily for its dividend yield.
In this respect, the yield of 6.3% must be viewed in relation to the center of gravity of global finance—10-year US Treasury bonds, which currently offer a coupon of 4.4%.
