June 20, 2016
Stemming from the emissions cheating scandal, the Volkswagen Group is expected to sell off some of their assets after a careful review of their portfolio. It has been reported that CEO Matthias Mueller is going over the current strategies of the company and considering stepping away from growth, a move into car-sharing ventures, as well as a greater focus on the development of electric vehicles. Many other changes may be coming down the line for the Volkswagen Group in order to help it recover from the largest crisis the company has ever faced. The 12 brands under the Volkswagen umbrella, as well as other side businesses, will also be reviewed during this process. The company has plans to consolidate its component manufacturing into one division that manufactures parts for all Volkswagen brands. It is expected that this new division would provide about 70,000 jobs in more than 24 locations all over the world. Mueller announced these changes to the supervisory board of the Volkswagen Group on June 15, 2016, and is expected to hold a media briefing within the next few days. However, industry experts believe that there is more going on behind Volkswagen’s doors than they are willing to reveal at this time. Volkswagen stock in Frankfurt has increased in value by 40 percent since October of 2015, at which point it had seen its lowest value due to the emissions cheating scandal coming to light. Prior to the fateful emissions scandal, the company had managed to acquire Scania, Ducati, and Porsche. Many believe that Volkswagen’s low profits were also related to their rigid and centralized structure and their focus on growth. At the same time, Volkswagen is accused of not keeping up with changes within the auto industry. At this point, reports say that no final decisions have been made as to which of the noncore assets will be sold off. However, assets that may get the ax include Ducati, MAN Diesel and Turbo, and their propulsion company MAN Renk. Many experts also suspect that Scania along with other truck manufacturing companies will be on the list of assets that get sold off under the Volkswagen brand. Morningstar analyst, Richard Hilgert, believes that a sell-off of the truck operations MAN and Scania would be wise due to the current high demand for commercial vehicles in Europe. It is also predicted that Ducati’s positive reputation will make it a sought-after asset and could go for a large amount of money. On the other hand, selling off portions of Volkswagen itself may be less likely as unions and the German state of Lower Saxony, the second largest shareholder in the company, aren’t too excited about seeing the company decrease in size.