What’s going on?
Volkswagen (VW) reported worse-than-expected results on Friday, while newly public Porsche showed its former parent how it’s done.
What does this mean?
VW made €4.3 billion ($4.3 billion) in operating profit last quarter, 65% more than the same time last year – despite the carmaker allotting €1.6 billion to cover one-off charges after halting Russian activities and listing Porsche. But that comes with a few caveats: chip shortages stunted last year’s sales, making that impressive uptick a little less impressive. And even then, that lower-than-expected 65% growth still leaves the firm’s operating profit below pre-pandemic levels.
That chip shortage has let up this year, but it’s far from over. Mix in ongoing supply chain delays that VW sees sticking around, and that toxic twosome pushed the firm to lower this year’s delivery targets. The carmaker now expects 2022 deliveries to match last year’s, a disappointing downgrade from its previously forecast 5 to 10% rise. Investors paid attention to caveats, and sent VW’s shares down 2% after the news.
Why should I care?
Zooming in: The student becomes the teacher.
Porsche also reported results on Friday, after VW listed it on the stock market just last month. The luxury carmaker made 41% more operating profit during the first nine months of this year versus the same time last year, and ballooned its operating profit margin by over three percentage points too. Luxury brands find it easier to pass rising costs onto their generally affluent customers, after all, and that nifty trick might have played a part in helping Porsche steal the title of Europe’s most valuable carmaker from VW earlier this month.
The bigger picture: Future focused.
The European Union (EU) reached a deal last week to effectively ban sales of combustion-engine cars from 2035, which – given the EU’s reputation for setting standards globally – will impact carmakers around the world. But VW’s already on it, having previously said it’ll stop selling combustion-engine cars in Europe sometime between 2033 and 2035.
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Originally Posted October 28, 2022 – Volkswagen’s Bugging
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