Volkswagen’s (VLKAY) Q1 2017

posted in: Earnings Call, Notes | 0

Fred Kappler – Head of Group Sales of Volkswagen Aktiengesellschaft

Global car market grew in the quarter

“Overall, the global car market grew by 3.3% in the first three months of this year. This growth was driven primarily, by the positive developments in Western European and the Asian markets, while sales in North America remain nearly at the same level as the previous year..”

They see opportunity in China

“….continued growth opportunities for us do exist in China. I think if I’m not mistaken, I think overall just 40% of the Chinese customers do finance their cars. That is, I think pretty good snapshot number for the market. If you take the United States as the other extreme, we talk 90% of the Americans finance or lease their cars, so this number with a 40% has come up significantly over the last five, six, seven years, so the market is normalizing and this is certainly other than the growth of our brands are expecting in China a huge opportunity. Currently our penetration rate is in the range of 14% out of the total I was describing.”

…and Brazil

we talked briefly about Brazil, a market which has almost collapsed. We expect the market to recover over time maybe starting as early as the second half, but slowly but surely from very low levels.”

Frank Witter – Member of the Board of Management of Volkswagen Aktiengesellschaft

The shift from diesel engines

“Coming to the diesel trend, we also witnessed a steady, but slow decline into the month for diesel engines, and of course in return the higher demand for gasoline engines in Europe just vary a little bit from month to month, but it’s far away from a landslide. Based on car registrations there has been a low single-digit decline about 4% in the diesel ratio in the total car market in EU5 since the beginning of 2015, so during the last two years and we have faced with a similar trend for our group brands. Nevertheless, we expect to shift of diesel engines to get the engines to be continued, but it will be a very evolutionary trend. ”