Summary of a television interview · Based on the recording of the conversation
In brief
Kliment Robev analyses the crisis at Volkswagen and in the European car industry as the group leaves the Euro Stoxx 50 index and announces new job cuts. In his view, Volkswagen’s problem lies not in its balance sheet but in its business model and cumbersome structure, and European manufacturers can only succeed through speed, software and strategic partnerships, including with Chinese companies.
Key points
- He describes Volkswagen’s exit from the Euro Stoxx 50 as a symbolic act that does not cause the crisis but merely registers it; the real problem is an operating margin of 3.8%, and as a rough guide he notes that BMW and Mercedes earn similar profits on revenues two to three times smaller.
- He outlines the restructuring plan – a further 50,000 job cuts, an operating margin target of 9% by 2030 and halving the model range – and points to the difficulty of cutting costs while investing heavily in new technology; in the coming quarterly reports he would watch free cash flow, margins and developments in China.
- According to Robev, China squeezes Volkswagen from both sides – Chinese brands are taking market share in Europe while the group’s sales in China are falling – and its many brands, each with its own board of directors, make decision-making slow, which is why he doubts that ideas such as switching plants to defence orders will succeed.
- He expects Volkswagen to part with inefficient units such as Seat and Ducati, but argues that the key is for European brands to abandon the model of doing everything alone and to seek partnerships that combine European quality and brand strength with the speed and technology of Chinese manufacturers.
- He sees tariffs as a boomerang that only buys time: Chinese companies get around them with hybrids and with factories in Europe, such as BYD’s plant in Hungary, and Chinese cars already account for around 9% of new cars sold in Europe.
- On the US market he remains cautious: alongside improving results and enthusiasm for artificial intelligence, he sees risks in high valuations and in 10-year bond yields, and he describes the US Treasury’s stepped-up debt buybacks as a move in the right direction whose effect remains uncertain.
Context
The conversation was prompted by Volkswagen leaving the Euro Stoxx 50 index, where Nokia takes its place, and by chief executive Oliver Blume’s announcement of a further 50,000 job cuts, bringing the total reduction in the workforce to 100,000. At the end, the host and Robev also discuss the US inflation data due that day.
Views reflect his position at the date of publication and are not investment advice. Regulatory information
