At yesterday’s annual shareholder meeting, Volkswagen had nothing but good news: A record year 2010, a record first quarter 2011, a company that is rolling in cash. Instead of thanking management for the good numbers and the (smaller than expected) dividend, ingrate shareholders bawled Winterkorn out.
- When will Porsche finally and officially come under Volkswagen’s roof?
- What’s the matter with Scania and MAN?
- And where are the fruits of Volkswagen’s engagement with Suzuki?
In the mergers and acquisitions department, Volkswagen has a lot of unfinished business, or “construction sites” as they call it in VW-speak.
Especially with Suzuki, Volkswagen appears to be treading water. At the end of 2009, Volkswagen spent €1.7 billion to buy a 19.9 percent stake in Suzuki. Tangible results have yet to emerge from the tie-up. Winterkorn’s comments sounded like Volkswagen is on the retreat.
Reporters of The Nikkei [sub] took copious notes when Winterkorn said that “certain aspects of our cooperation with Suzuki are developing more slowly than originally anticipated.”
Winterkorn said that “a whole range of attractive opportunities for cooperation, for instance in procurement, have emerged.” It’s always a bad sign when a partnership degenerates to buying parts together (which usually doesn’t work out anyway.) Winterkorn said that the two are focusing on “the small-car segment in India in particular.” Suzuki owns that market and is unlikely to give it away.
Winterkorn told shareholders they would not be hurt even if the tie-up with Suzuki does not move forward. “Overall, we can say that our investment in Suzuki is paying off — not least because Suzuki is an excellently managed company that makes good money.” That’s not a good sign. A car company usually doesn’t invest in another car company just to collect dividends.
Tagged as Bertel Schmitt, Germany, Japan, MAN, SCANIA, Suzuki, Volkswagen
14 Comments on “Volkswagen: Empire Under Construction...”
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this is one very well run company. to post these kind of successes in this environment is outstanding. shows what’s possible with good management. reminds me of how GM made money thru the Depression. then again, they had APS Jr.
Germany has had a few things in its favor.
@Cole: Like leverkasen und bier! The cars are OK, too.
Lets see some volkswagen-Suzuki hybrids?!?!
“As you can see, my young apprentice, your friends have failed. Now witness the firepower of this fully ARMED and OPERATIONAL battle station!”
Whew: that was a close one! Just because I can disassemble and fully clean this keyboard’s internals doesn’t mean I like doing it.
+1!
“Instead of thanking management for the good numbers and the (smaller than expected) dividend, ingrate shareholders”
Good isn’t good enough if shareholders where expecting better.
VW is strong in Europe and China, but very weak in America. And China market share will be difficult to keep, as China growth will continue to slow down gradually (100% growth per year isn’t sustainable).
VW’s not very weak in America.
They sell fewer cars than Honda sells Civics, and most of them are cheap cars built specifically for our market. They certainly aren’t strong.
From a shareholder point of view, cheap or not cheap Jetta doesn’t matter so much; profitable or unprofitable Jetta matters a whole lot more.
And I’ll bet that profitability of the new Jetta and Passat is massively improved over their predecessors.
Re. “construction sites”: Translation of “construction sites” is “Baustellen” and is a kind of catch-all german term for tasks or business which are incomplete, and often unpleasant. (Aufgaben die unerledigt, moeglicherweise unangenehm, sind.)
Suzuki owns [the Indian] market and is unlikely to give it away.
Yes, but VW owns 19.9% of Suzuki. There may not be that much collaboration yet, but the fact remains, VW owns 19.9% of the dominant automaker in India, a market no one should ignore.
That’s not a car factory, is it? An office building? Power plant?
Edit: saw the hover-caption. That was my first guess.