Volkswagen's Next Steps Will be Tough

Dow Jones09-21

0551 GMT - Volkswagen's recent agreement to further cost cuts was a positive surprise, but the next steps will prove much harder, Bernstein analysts write. VW group last week slashed guidance due to around 9 billion euros of fresh charges. The German carmaker now expects a 2026 operating return on sales of up to 1%, against previous guidance of 4.0%-5.5%. The bank says it isn't hard to place a much higher valuation on VW group assets than the current stock price, with VW's 75% stake in Porsche AG worth 31 billion euros at the close on Friday versus VW group's then 38 billion euro market capitalization. There are also some positive signs with VW's new vehicle platform and EVs, the bank adds. "But we are a long ways from fixing decades of cost build up and strategic mistakes."

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