Analysis of the results of the Volkswagen automobile Company

Abstract

The automaker Volkswagen's range of activities includes the design, manufacturing and marketing of automobiles. This division includes the brands Volkswagen, Bentley, Lamborghini, Scania, Audi, Skoda, Seat and Bugatti.

The finance division is a subsidiary of Volkswagen Group and Volkswagen Financial Services AG. It is in charge of different activities: vehicle finance, banking, insurance products, leasing, and fleet management. Volkswagen is a giant in the automobile industry. As a first European group, it had a turnover of 108,897 million euros and employs 329,000 people worldwide in 2007. In 2007, Volkswagen ranked first in market share in the classification of the European market. At the global level, Volkswagen was ranked as the fifth turnover in 2006.It was the fourth in 2008, dethroning the passage Daimler.

It is now possible to understand the value of such an alliance for Porsche. It now controls the largest European manufacturer, with the aim to eventually become a world leader at Toyota. Since Porsche has acquired the new European Company Statute, seen by many as a prerequisite for its merger with Volkswagen, bringing the two entities togther was inevitable. Porsche's interest to his counterpart thus goes beyond the simple financial investment and shows a strong commitment to family Piech to unite into one, the fate of two German homes.

One can see that Volkswagen makes most of its sales in Europe: 60.45% in 2007, despite the fact that the brand seems to shift to emerging markets and developing countries such as Asia and South America. The share of revenues from European sales remained relatively constant. The group is also present in Asia-Pacific: 6.92% (emerging markets), where its sales have increased over the past two years.

Often a company operates in different activities. In the case of Volkswagen, there is a core business: building cars and a secondary activity, managed by the Financial Services Division of Volkswagen. The group is both an industrial and a financial institution.

The Volkswagen Group is a group of very large size: it is number one in its market of choice: Europe. There is an effort to guide their operations to South America and Asia-Pacific that appears in the share of its turnover. Its business is still growing when integrating the exceptional year of 2006:6.45% for the last 5 years and relatively irregular deviation of 4.20. The results are smooth if one ignores the impact of this great year, with the growth dropping to 4.80% on average and the standard deviation is reduced to 0.90%.

The difference 0.42%. of is explained by the existence of exogenous factors to the amount of sales revenue, which also impacts on the total expense and increase their volatility. These results show that operating costs as well as sales have increased steadily over the study period.

Volkswagen demonstrated a clear ability to improve productivity over the last 5 years. The cost of sales, and distribution and administration costs are increasing in a lower proportion than sales. The total expense and sales revenue are highly correlated. Analysis of the sensitivity of the total expense to changes in sales revenue illustrates the major risk posed by fluctuations in sales for the cost of goods sold.

Tags: Volkswagen; leading automobile company; financial analysis;