Volkswagen performed better than expected in the second quarter despite facing challenges with its major brands. The overall operating profit did not decline as much as anticipated, but the performance of the mass-market brands within the group did not sit well with investors. Analyst George Galliers from Goldman Sachs criticized the weak margins of the volume brands. On the other hand, DZ Bank views the situation as less dramatic and maintains its buy recommendation for VW shares.
Following the cost-cutting measures implemented for jobs and production capacities, Volkswagen CEO Oliver Blume emphasized the importance of focusing on costs across the entire organization, not just the struggling VW brand. Auto expert Ferdinand Dudenhöffer from the Center Automotive Research in Bochum highlighted the challenges faced by top brands like Porsche, Audi, and Cariad within the Volkswagen Group.
The poor performance of the core mass-market brands, including VW, Seat/Cupra, Skoda, and VW Nutzfahrzeuge, led to a significant drop in the operating profit due to negative price and mix effects. Despite this, the DZ Bank remains optimistic about VW’s business outlook for the second half of the year, anticipating positive impacts from cost reduction measures and future cooperation in e-mobility and software development.
While the current stock price of VW reflects many negative factors, the company still faces challenges in maintaining its market position, especially in China. Chinese manufacturers are gaining traction with consumers due to advanced software and customer-centric infotainment systems, areas where VW’s ID models fall short. From a technical analysis perspective, the next strong support level for VW shares is at €87.50, where investors could consider placing a buy limit order.
In conclusion, while VW may not be a strong buy at the moment, there is potential for improvement with a strategic focus on addressing key weaknesses and capitalizing on emerging opportunities in the market. Investors should closely monitor developments within the company and the industry to make informed decisions regarding VW stock.
