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Volkswagen brand says 6% operating margin is now more realistic in the medium term, Volkswagen Group expects to pay 1.5 billion euros for non-compliance with the CO2 regulation
- According to Bernstein, Volkswagen told analysts that operating margin of 6% at the Volkswagen Brand in the medium term is now more realistic, compared to earlier target of 6.5% by 2026.
- Out of the 35,000 job cuts targeted by the company by 2030, 24,000 will be achieved through natural attrition, Bernstein said.
- Bernstein pointed out that Volkswagen said its order book in Western Europe is slightly larger than the pandemic at 850,000 jobs.
- Volkswagen expects to pay around 1.5 billion euros for non-compliance with the EU CO2 regulation.
Assessment
I think the reduced margin guidance at the Volkswagen brand was expected given that most of the benefits of the collective agreement will likely arrive in 2029. My recent estimate assumes that the 6% operating margin will arrive in 2028.
The good news is on the CO2 penalty guidance. The 1.5 billion euros guided by the management is significantly lower than my estimate of 2.8 billion euros. However, we currently don’t know if the 1.5 billion euros is after pooling or before. If it’s before pooling, the CO2 headwind would be significantly lower.