Top Margin Menu

VW Market Share Drive Causing Pain Elsewhere

VW is trying to gain market share aggressively. It hurts profits but also significantly further weakens less financially solid competitors. 

Volkswagen’s drive for market share is weakening its profits, but also probably causing more damage to its competitors, according to Nomura International.

Nomura expects VW to remain profitable in 2009, unlike most its competitors, and breakeven in 2010.

Nomura International analyst Jeremie Papin said VW’s sales will only fall 3 per cent in 2009, compared with his previous projection of a 10 per cent fall. In 2010, sales will fall faster, down 6 per cent compared with Nomura’s previous projection of up 3 per cent. Profits will fall because of a weaker mix, as scrapping incentives boosts the sale of small cars.

“We believe this volume performance is unlikely to support earnings. Average selling prices are down as product mix is very weak and transaction prices are even weaker as manufacturers incentives are added to state sponsored scrapping incentives. VW is clearly trying to gain market share aggressively in most markets. As such, it hurts its profit potential but also significantly further weakens less financially solid competitors by forcing them into R&D/Capex cuts that will likely further damage their competitive position,” Papin said.

“We still expect VW to return to a positive profit in 2009 and breakeven in 2010. A remarkable achievement for any manufacturer especially as investments in future products/technologies will have been safeguarded compared with financially distressed competitors,” he said.


Neil Winton – July 1, 2009

Print Friendly, PDF & Email

No comments yet.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Site Designed and Administered By Paul Cox Photographic