Valuation Model Update
I have updated my Volkswagen’s earnings estimates for 2024 and 2025 as follows:
The update takes into account the following;
- My improved confidence in the ability for Audi to deliver better performance in H2 following its stabilized earnings in Q2.
- Lowered 2024 guidance at Porsche due to supply chain issues.
- My forecast that the Cyber security law could lead to an headwind of 65,000 units in 2024.
- Pricing pressures as observed in United States and as signaled at Mercedes-Benz and Renault in Q2. This is likely to be witnessed at the Volkswagen Brand Group Core only (given economic brands are more sensitive to price increases compared to luxury brands and Traton saw better pricing in Q2). Also, Porsche and Audi results suggest growth in pricing in Q2. Accordingly, I have slightly adjusted pricing estimates for the Brand Group Core and Traton.
- Around 500 million euros headwind on operating profit in 2025 as a result of failure to meet the EU emissions target.