I=7 Volkswagen could end up paying $2.8 billion in an Indian tax evasion case
Volkswagen’s Skoda unit is facing a $1.4 billion tax evasion case in India.
According to the office of customs, Volkswagen willingly “mis-declared and mis-classified” car imports as “individual parts”, hence paying an import tax of 5%-15% instead of the 30%-35%.
If found guilty, Volkswagen could pay about $2.8 billion in total, including the penalty and interest.
It’s hard to tell. I haven’t found any expert opinions on the same. However, the tax commission says it found the irregularity after raiding Skoda’s factories That means their case is strong.
In 2016, the commission accused the company of evading 44 million euros in taxes. Skoda appealed but lost.
Hmm what was the outcome back then? (So I and others don’t need to search in the document)
Would you say it’s likely that Volkswagen either wins or looses and has to pay the full amount or would there be likely some kind of deal and settlement?
Which number do you assign to this headwind in your base case valuation model?
The tribunal confirmed the authority’s findings as well as the tax owed and penalties imposed. However, Skoda was given an option to pay 25% of the penalty (€10 million) instead of the full amount but only if it paid the amount owed within 30 days. I think a similar scenario could repeat itself, leading to an headwind of €1.75 billion. However, considering that such cases tend to be prolonged, it’s hard to tell which year the charge will be booked.
I=5 Audi sales a significant minority stake in Sauber to Qatar Investment Authority (QIA), giving the Formula 1 subsidiary some breathing room
Last week, Audi announced that it had agreed to sell a significant minority stake in Sauber Holding AG, a company in charge of its Formula 1 (F1) to Qatar Investment Authority (QIA).
Audi plans to join F1 in 2026 when sweeping new regulations such as increased electrical power and 100% sustainable fuels will be introduced.
F1 will be key to Audi’s success in the high-performance arena and will also help in marketing.
It is estimated that Audi will sell 30% stake in Sauber for around $350 million to QIA.
The deal comes following speculations that Audi’s takeover of Sauber isn’t going according to plans.
I=6 Porsche to cut China dealerships by 28% by the end of 2026 as demand falters in the region
Porsche will reduce its dealerships in China by 28% by the end of 2026 due to declining sales.
“With declining customer demand and reduced sales, optimizing the dealership network has become necessary. We want to ensure our partners stay profitable in the local market,” said Alexander Pollich, President and CEO of Porsche China.
Porsche has 138 dealerships in China.
Assessment
The decision to reduce the number of dealerships by 39 indicates that the company doesn’t expect to recoup its lost market share in the country over the medium term. Porsche also said in the recent earnings call that they are pursuing a cost-reduction strategy that will enable them to remain highly profitable even with car sales of just 250,000 cars per year, another proof that they see future demand as bleak.
I=4
Volkswagen plans to sell 15% of its shares in Traton in the first half of 2025, aiming to raise around 2 billion euros, Manager Magazin reported citing sources familiar with the matter.
I=6 Volkswagen North America boss is next on the chopping board and the region is now expected to miss earnings by 1.3 billion euros between now and end of 2025- Manager Magazin says
According to Manager Magazin, Volkswagen North America CEO will be fired soon for projecting 100,000 ID.4 sales a year in the region which turned out to be a flop.
The newspaper pointed out that Volkswagen of North America earnings between now and end of 2025 are expected to fall short by 1.3 billion euros.
A deficit of around 700 million euros is associated with the incentives meant to push up ID.4 sales while a decrease of around 900 million euros will come from lower sales.
According to management in Wolfsburg, the problem is unfavorable product mix.
The newspaper added that the launch of the new Scout EV model has been pushed to 2028 from 2026-if ever.
Audi reduced the price of its Q4 e-tron in Europe by more than €6,000, making it significantly less expensive than its main rival BMW iX3 (which starts at €67,300) and at par with best selling mainstream models such as Tesla Model Y, Skoda Enyaq iV and Kia EV6.
The changes are effective in mid-February.
Audi Q4 e-tron is one of Audi’s best-selling electric model, with 78,800 units delivered in the nine months of 2024.
Volkswagen brand has set an internal target to achieve operating margin of 6.5% from the current 2.1%, that’s according to interna documents reviewed by the Business Insider.
The margin target has no specific dateline but is part of the 2025 goals to improve cost and performance at the brand.
I=5, VW Group Blume supports the ban on combustion vehicles in 2035, wants Trump to give the company advantages in terms of tariffs
In an interview with ZDF, CEO Oliver Blume said he is now seeking direct contact with President Trump in an attempt to gain advantages in terms of tariffs. He cites the plants in Tennessee and South Carolina-which will cost the company over ten billion euros as reasons for tariff advantages.
Blume doesn’t think much of the new purchase premium for electric vehicles proposed by Chancellor Scholz but instead wants a tax-saving model.
He is in favor of the EU’s planned 2035 ban on new combustion engine car sales but proposes introducing checkpoints along the way to assess the progress of electromobility.