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1. Company Snapshot

1.a. Company Description

Volkswagen AG manufactures and sells automobiles primarily in Europe, North America, South America, and the Asia-Pacific.The company operates in four segments: Passenger Cars and Light Commercial Vehicles, Commercial Vehicles, Power Engineering, and Financial Services.The Passenger Cars and Light Commercial Vehicles segment develops vehicles, engines, and vehicle software; and light commercial vehicles; and produces and sells passenger cars and related parts.


The Commercial Vehicles segment develops, produces, and sells trucks and buses; and offers parts and related services.The Power Engineering segment offers large-bore diesel engines, turbomachinery, and propulsion components.The Financial Services segment provides dealer and customer financing, leasing, banking and insurance, fleet management, and mobility services.


The company also offers motorcycles.It provides its products under the Volkswagen Passenger Cars, Audi, ŠKODA, SEAT, Bentley, Porsche, Volkswagen Commercial Vehicles, Scania, MAN, Lamborghini, Ducati, and Bugatti brands.Volkswagen AG was founded in 1937 and is based in Wolfsburg, Germany.


Volkswagen AG operates as a subsidiary of Porsche Automobil Holding SE.

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1.b. Last Insights on VOW3

Volkswagen's recent momentum is driven by a pledge to defend its European lead, with a focus on electric vehicle (EV) expansion. A $131 million deal with QuantumScape for solid-state battery development has fueled excitement. Despite short-term pullbacks, the company's long-term growth prospects remain intact. Volkswagen's PowerCo has partnered with QuantumScape to accelerate commercial scale-up. Additionally, the company's valuation appears attractive after a recent share dip. Porsche's EV launch delay and altered profit outlook have impacted sentiment, with shares declining over 7%.

1.c. Company Highlights

2. Volkswagen's Mixed 9-Month Results: Strong Product Momentum Offset by Tariff Headwinds

Volkswagen Group's 9-month results show a mixed picture, with sales revenue of EUR 239 billion, up 1% year-over-year, while operating result declined 60% to EUR 5.4 billion, and profit after tax fell 61% to EUR 3.4 billion. Earnings per share (EPS) came in at -0.96, significantly below estimates of 5.17. The operating return on sales stood at 2.3%, 60% below the prior year, mainly due to EUR 5.3 billion in headwinds from costs related to Porsche product strategy realignment and goodwill impairment, and increased U.S. tariffs.

Publication Date: Dec -02

📋 Highlights
  • BEV Growth Momentum:: Global BEV share increased to 11% with 718,000 units delivered, up 42% YoY.
  • Q3 Operating Loss:: Negative EUR 1.3 billion due to EUR 5.3 billion headwinds from Porsche strategy costs and U.S. tariffs.
  • Revenue and Profit Declines:: Sales revenue rose 1% to EUR 239 billion, but operating profit fell 60% to EUR 5.4 billion.
  • Cost-Saving Targets:: Aims for EUR 4 billion in cost savings by 2030, including EUR 1 billion in 2025 from wage logic and workforce reductions.
  • U.S. Tariff Impact:: Annual EUR 5 billion burden expected, with EUR 2.8 billion impact in 2025, countered via localization and pricing strategies.

Operational Highlights

The company achieved strong product momentum, with global BEV share increasing to 11% and 718,000 BEVs delivered, up 42% year-over-year. Deliveries to customers rose 1% to 6.6 million vehicles, driven by a 9% growth in Europe and double-digit growth in North America. Order intake in Western Europe remained strong, up 4% from year-end 2024.

Tariff Impact and Mitigation Measures

Volkswagen expects the U.S. tariffs to stay and is taking measures to reduce costs and increase productivity. The company estimates tariffs could cost up to EUR 5 billion, with a current run rate of EUR 2.8 billion expected to rise to EUR 3 billion for the full year 2025. To mitigate this, Volkswagen is considering increasing localization of parts in the US to take advantage of the USMCA agreement and working on price increases, as stated by Arno Antlitz, CFO of VW, "we are working on pricing and localization" to offset tariffs in the U.S.

Valuation and Outlook

Analysts estimate next year's revenue growth at 2.0%. Volkswagen's current valuation metrics include a P/E Ratio of 5.56, P/B Ratio of 0.27, and EV/EBITDA of 4.32. The Dividend Yield stands at 6.39%. Given the current challenges, the company's commitment to ramping down investments and improving free cash flow is crucial. Volkswagen's investment plan is EUR 165 billion over the next five years, but it's prepared to work down this figure over time.

Cost Savings and Restructuring Efforts

The company targets EUR 4 billion in cost savings by 2030, with EUR 1 billion this year and another EUR 500 million next year from wage logic and workforce reduction. Audi's restructuring efforts are underway, with a burden of EUR 200 million and plans to discuss product strategy on their next call. Volkswagen is committed to finding solutions to the Nexperia issue, with a team working on finding alternative sources and suppliers for semiconductors.

3. NewsRoom

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Is Volkswagen Still a Bargain After Its 35% Rally and EV Strategy Momentum in 2025?

Dec -04

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EU to review tariffs on Volkswagen’s EVs made in China

Dec -04

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EU to review tariffs on Volkswagen’s EVs made in China

Dec -04

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EU launches 1st formal review of Chinese EV tariffs after VW Anhui's submission

Dec -04

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The $13 Billion Time Bomb Inside Germany's Auto Empire

Dec -03

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Tesla has problem no one was pricing in

Dec -03

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Petrol cars cheaper than EVs after tax raid – unless you have a driveway

Dec -03

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Vaudit Surpasses $1 Billion in Digital Ads Audited in 2025 and $100 Million in Refunds Processed for Global Brands Including Accenture, HP, Panasonic, and Volkswagen

Dec -03

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.61%)

6. Segments

Passenger Cars and Light Commercial Vehicles

Expected Growth: 4.1%

Stable demand in Europe, growth in Asia, and increasing popularity of SUVs will drive growth. Volkswagen’s strong brand image, wide range of models, and investments in e-mobility and digitalization will support growth.

Financial Services

Expected Growth: 6.8%

Volkswagen AG's financial services growth is driven by expansion in emerging markets, increasing demand for mobility services, and the integration of digital technologies into its banking and insurance products.

Group Financing

Expected Growth: 6.5%

Volkswagen AG's financial services and financing options are expected to grow driven by increasing demand for mobility solutions, expanding presence in emerging markets, and a shift towards digitalization.

Commercial Vehicles

Expected Growth: 5.5%

Volkswagen AG's commercial vehicles is driven by increasing demand for e-mobility, rising urbanization, and growing e-commerce activities, which are expected to fuel growth in the segment.

Power Engineering

Expected Growth: 4.5%

Volkswagen AG's Power Engineering segment is driven by increasing adoption of hybrid and electric vehicles, stringent emission norms, and expanding global infrastructure for alternative fuel vehicles.

Unallocated Activities

Expected Growth: 4.4%

Volkswagen AG's unallocated activities are expected to grow driven by increasing demand for electric vehicles, expansion into new markets and cost reduction initiatives, supporting a forecast CAGR of 4.4%.

Consolidation/Holding Company Function

Expected Growth: 6.3%

Volkswagen AG's financial management and oversight drive growth through electrification, autonomous driving, and expanding presence in emerging markets, particularly in Asia.

7. Detailed Products

Passenger Cars

Volkswagen's passenger cars are designed for personal transportation, offering a range of models such as Golf, Jetta, and Passat.

Commercial Vehicles

Volkswagen's commercial vehicles, including vans, trucks, and buses, are designed for business and logistics use.

Electric Vehicles

Volkswagen's electric vehicles, such as the ID. series, offer sustainable and environmentally friendly transportation solutions.

Financial Services

Volkswagen Financial Services provides financing, leasing, and insurance solutions for customers and dealerships.

Ride-hailing and Car-sharing Services

Volkswagen's mobility services, such as WeShare, offer car-sharing and ride-hailing solutions for urban mobility.

Autonomous Driving Technology

Volkswagen's autonomous driving technology is designed to enhance safety and convenience in vehicles.

Digital Services

Volkswagen's digital services, such as Volkswagen We, offer connected car solutions and digital mobility services.

8. Volkswagen AG's Porter Forces

Forces Ranking

Threat Of Substitutes

Volkswagen AG faces moderate threat from substitutes, as customers have limited alternatives to its vehicles. However, the rise of electric vehicles and alternative modes of transportation may pose a threat in the future.

Bargaining Power Of Customers

Volkswagen AG has a large customer base, which reduces the bargaining power of individual customers. Additionally, the company's strong brand reputation and wide range of products limit customers' ability to negotiate prices.

Bargaining Power Of Suppliers

Volkswagen AG has a large supplier base, which reduces the bargaining power of individual suppliers. However, the company's dependence on a few key suppliers for critical components may give them some bargaining power.

Threat Of New Entrants

The automotive industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This makes it difficult for new entrants to compete with established players like Volkswagen AG.

Intensity Of Rivalry

The automotive industry is highly competitive, with many established players competing for market share. Volkswagen AG faces intense rivalry from companies like Toyota, General Motors, and Ford, which may lead to pricing pressures and reduced profit margins.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 60.18%
Debt Cost 3.95%
Equity Weight 39.82%
Equity Cost 10.22%
WACC 6.44%
Leverage 151.10%

11. Quality Control: Volkswagen AG passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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BMW

A-Score: 6.3/10

Value: 9.1

Growth: 5.6

Quality: 2.5

Yield: 8.8

Momentum: 6.5

Volatility: 5.7

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VW

A-Score: 6.3/10

Value: 10.0

Growth: 3.6

Quality: 2.4

Yield: 10.0

Momentum: 5.0

Volatility: 7.0

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Mercedes-Benz

A-Score: 6.3/10

Value: 8.9

Growth: 4.9

Quality: 3.3

Yield: 10.0

Momentum: 3.5

Volatility: 7.3

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Michelin

A-Score: 5.9/10

Value: 6.4

Growth: 4.7

Quality: 4.7

Yield: 8.8

Momentum: 3.0

Volatility: 8.0

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Exor

A-Score: 4.7/10

Value: 7.7

Growth: 3.3

Quality: 7.3

Yield: 0.6

Momentum: 1.5

Volatility: 8.0

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Ferrari

A-Score: 4.2/10

Value: 0.7

Growth: 7.7

Quality: 7.2

Yield: 1.2

Momentum: 3.5

Volatility: 4.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

105.4$

Current Price

105.4$

Potential

-0.00%

Expected Cash-Flows