Yahoo Finance Will Volkswagen's (VWAGY) Aggressive EV Push Buoy 2023 Results?
Despite global economic headwinds, Volkswagen VWAGY managed to register strong results last year. Despite the decline in overall deliveries by 7% to 8.3 million vehicles in the last fiscal year, the company’s revenues rose 12% on a year-over-year basis. The revenue growth was underpinned by a positive product mix and cost advantages. The operating margin grew 8.1% in 2022.
VWAGY recorded 26% growth in BEV deliveries in 2022. This year, Volkswagen is geared up to launch new models that will act as tailwinds to further improve BEV share in overall deliveries. The auto manufacturer is a market leader in BEV segment in Europe and is strengthening its presence in China with a robust demand for its e-model range. With its new lineup and a strong order book of 1.8 million vehicles, Volkswagen is well positioned to deliver strong growth going forward.
Strong EV Sales & Massive Spending Plans
In 2022, Volkswagen’s BEV segment emerged as an outperformer, registering 26% growth in the number of deliveries. The top three performers for Volkswagen in 2022 were The Group’s best-selling BEVs, namely Volkswagen ID.4/ID.5, Volkswagen ID.3 and ŠKODA Enyaq iV with sales of 193200, 76600 and 53700 units, respectively.
The auto manufacturer’s BEV share stood at 7% in the last reported year and with its new model launches, the BEV share is expected to reach 10% of total deliveries in 2023. The new models scheduled for 2023 are the ID.7, ID.3, ID. Buzz Long Wheel Base, Audi Q8 e-tron and CUPRA Tavascan.
Most importantly, Volkswagen is planning to invest a total of EUR 180 billion, starting in 2023 and continuing until 2027. More than 68% of this investment will be contributed toward notching up its digitization and electrification games. By 2025, out of every 5 vehicles sold, one is expected to be all electric. The investment is expected to peak in 2025 and may start declining thereafter.
Growing opportunities in NA & China Market
With the commencement of ID.4 production in the Chattanooga plant and plans to start deliveries of its iconic Scout brand by 2026, the manufacturer has strengthened its leadership team in the United States. In 2022, North American market continued to grow with an overall BEV delivery of 44,200 units, up 18.8% on a year-over-year basis. Volkswagen now ranks 4th in the all-electric segment. It has acquired a 4% market share in the total market, including Internal Combustion Engine vehicles and targets to increase the share to 10% by the end of 2030. This will be mostly driven by the rollout of the ID. Buzz and ID.7 in 2024.
With the introduction of cross-brand China boards, the decision-making and development process is set to accelerate, optimizing synergies between brands. The partnership with Horizon Robotics will expedite the development of driver assistance systems and automated driving in China. Moreover, Volkswagen aims to fulfill the needs of local customers by introducing smart and comfortable travel experience, for which it has established CARIAD China to speed up the R&D process. The strategy has worked exceptionally well in 2022 and BEV deliveries increased by 68% year-over-year. Last year, 143,100 ID.3, ID.4 and ID.63 models were sold, representing a 102.9% increase year over year.
Outlook
For 2023, overall deliveries are estimated to be around 9.5 million units, driven by the strong order backlog. The revenue is expected to grow 10%-15% higher year over year. The operating margin is expected in between 7.5% and 8.5%.
Zacks Rank & Key Picks
VWAGY currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few other top-ranked players in the auto space include Volvo VLVLY, Wabash National WNC and Modine Manufacturing MOD, all of which sport a Zacks Rank #1.
The Volvo Group is a manufacturer of trucks, buses, construction equipment, diesel engines and marine and industrial engines. The Zacks Consensus Estimate for VLVLY’s 2023 earnings imply year-over-year growth of 6.25%.
Wabash is one of the leading manufacturers of semi-trailers in North America. The Zacks Consensus Estimates for WNC’s 2023 sales and earnings imply year-over-year growth of 13.06% and 28.89%, respectively.
Modine operates primarily in a single industry consisting of the manufacture and sale of heat transfer equipment. The Zacks Consensus Estimates for MOD’s 2023 sales and earnings imply year-over-year growth of 11.43% and 43.09%, respectively.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Wabash National Corporation (WNC) : Free Stock Analysis Report
Modine Manufacturing Company (MOD) : Free Stock Analysis Report
AB Volvo (VLVLY) : Free Stock Analysis Report
Volkswagen AG Unsponsored ADR (VWAGY) : Free Stock Analysis Report
