Comments by "Steve Valley" (@stevevalley7835) on "VW admits CRISIS: “We have 1 or 2 Years” to save the company says CFO" video.

  1. I laffed, a couple years ago, when the VAG CFO was talking about how they will take the VW brand "upmarket". That seems to be the ambition at a lot of companies: push prices and profit margins higher and higher. Wags have said "VW has always thought it was more high end than it really is". There are a couple UK based T-Roc reviews on youtube, where the reviewer comments on the cheap, hard, plastic, interior, but notes that, in spite of the cheap materials, VW wants over 30,000 Pounds for the things.
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  2. The man who took the fall for dieselgate, Martin Winterkorn, also presided over a time when VAG improved quality markedly. In retrospect, the Winterkorn era was when VW was offering some of it's most reliable cars in the US, in decades, with the product line scoring at least average reliability records. Now, some VW products, like the Jetta and Taos, are among the worst on the market.
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  3.  @nomayor1  when I was in b-school, decades ago, we discussed the dangers of debt. The problem with debt is that, while earnings can fall, debt service costs continue. VAG could have sold the vanity brands years ago, and paid down some of that debt. VAG could have wound down the redundant Skoda and Seat divisions, to reduce overhead costs, and apply the savings to paying down debt. Nope. They did none of that.
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  4. All the foreign automakers are losing big gobs of market share in China. Jeep has already withdrawn. Ford is looking at China more as an export hub, rather than competing in the domestic Chinese market. VAG started losing focus in the 90s. Ferdinand Piech went into "empire building" mode, adding armloads of halo products, Bugatti, Bentley, Ducati, and Lamborghini to the product portfolio. Marchionne said that Bugatti was the biggest waste of capital he had ever seen. He also added Skoda and Seat, offering the same products, in the same markets, as the VW brand, while adding extra overhead. I had hopes that the diesel scandal would force VAG to clean up it's product portfolio. The head of the union made the same observation. Why is VAG wasting so much money on redundant and vanity products? But no, VAG kept all the nonsense, and kept bleeding. So now, VAG declares a "crisis", and dumps on the staff in the plants. Right out of the McKinsey playbook. Not a word about VAG going all in on gimmicks, that don't work every well, while the basic reliability of their cars goes in the tank. And I say all this as a VW owner, a now 10 year old VW, from a time when VW executed much better on reliability and useability.
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  5.  @fredflinstone8628  Equity is safer, because you never need to redeem it, and you can stop paying dividends any time you wish. Default on debt, and you are in the kimchee.
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  6.  @dylanthomas12321  my term for running a company for financial manipulation is "Welchism", after Jack Welch, who ran GE into the ground. If you haven't noticed, Boeing, once a leading US manufacturer, after 20 years of Welchist management, had driven equity Billions of dollars into the red, while their reputation for sound engineering is in tatters. Welchist management put all their profits, and more, into stock buybacks, while cutting corners in engineering and product quality. By the standards I was educated to, Boeing has been bankrupt for a number of years now, because they owe more than they own. They just haven't defaulted on any of their mountain of debt, yet. Have you noticed how high VW's warranty claims expense is? Like at Boeing, shoddy quality is a sign of Welchist management. In 2022, VW's global warranty expense was 3.9% of sales. For context, Ford, which is pilloried in the US for high warranty claims, has a claim expense of 2.9%; Hyundai, with it's repeated issues with defective engines, pays out 2.8%. BMW 1.7%, Renault 1.3%. Honda 1.2% Toyota 0.7% So, does VW improve quality to reduce it's warranty claims expense? I don't hear one word about that. All I hear from VW is how they want to raise prices even more, while taking from the line workers in the plants.
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