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Volkswagen share could bounce on new strategy

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Carlsquare
7 apr 2022 | 2 Minimiera
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Yesterday, CFO Arnold Antlitz of Volkswagen announced to Financial Times a new strategy for the car maker, focusing on manufacturing premium cars instead of volumes. At the time of the statement, markets were quite volatile with DAX dropping 2.6 per cent mid-day. Simultaneously, the share price of Volkswagen was dragged down by almost 3 per cent. We believe that the fundamentals of Volkswagen have been overlooked in market volatility and see potential for the shares to bounce back

Yesterday, CFO Arnold Antlitz of Volkswagen announced to Financial Times a new strategy for the car maker, focusing on manufacturing premium cars instead of volumes. At the time of the statement, markets were quite volatile with DAX dropping 2.6 per cent mid-day. Simultaneously, the share price of Volkswagen was dragged down by almost 3 per cent. We believe that the fundamentals of Volkswagen have been overlooked in market volatility and see potential for the shares to bounce back

Laying out the strategy, Volkswagen will scrap combustion engine models by the end of the decade, sell fewer cars overall and concentrate on producing more profitable vehicles for the premium market. Historically, the car maker, like many competitors, has been focusing on selling more volumes year after year. However, with supply-chain issues resulting in difficulties in manufacturing large quantities, the new strategy positions Volkswagen for better margins and less risk for production issues. Recently, car maker Volvo was forced to shut down production temporarily due to semiconductor shortages.

Looking at performance last year from sector-colleagues BMW and Mercedes, with global shortages of semiconductors these premium suppliers charged more for their cars, enabling record profits despite lower volumes.

Volkswagen (in EUR) July 2 2021 to April 7 2022

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Source: Infront and Carlsquare. Note: Past performance is not a reliable indicator of future results.

Volkswagen (in EUR) weekly five-year chart

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Source: Infront and Carlsquare. Note: Past performance is not a reliable indicator of future results.

The full name for abbreviations used in the previous text:

EMA 9: 9-day exponential moving average

Fibonacci: There are several Fibonacci lines used in technical analysis. Fibonacci numbers are a sequence of numbers in which each successive number is the sum of the two previous numbers.

MA20: 20-day moving average

MA100: 100-day moving average

MA200: 200-day moving average

MACD: Moving average convergence divergence

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