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Bloomberg's Tynan on VW and the Future of Diesel in Cars(Audio) · Bloomberg Intelligence

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  Speaker 1: Broadcasting live to New York Bloomberg eleven rio, through Washington,
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  Speaker 1: VW earnings maybe not quite as bad as some had forecast,
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  Speaker 1: Charlie from the Bloomberg News Room. I'm Ramie. In Essencio,
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  Speaker 1: and we thank you, and again recapping a Mouve law
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  Speaker 1: for US equities SMP five hundred index down eight now
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  Speaker 1: tenths of one percent. I'm Charlie Pealaton. That's a Bloomberg
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  Speaker 1: business flash. This is taking stock with Kathleen Hayes and
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  Speaker 1: Grim Box on Bloomberg Radio. Volkswagen it's emissions cheating, hits
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  Speaker 1: profit at its biggest brand, of course, that would be
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  Speaker 1: the VW. That is the latest news we got as
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  Speaker 1: VwV Swagon Group reports earnings. But they're very thankful for
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  Speaker 1: increases of four percent at both Scota and Audie and
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  Speaker 1: ten percent at Porsche when you look at total deliveries.
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  Speaker 1: Kevin Tina covers this for Bloomberg Intelligence. He's senior Auto's
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  Speaker 1: analysts joining us from Princeton, New Jersey today. Kevin, welcome. Thanks.
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  Speaker 1: So in terms of the expectations, I mean this is
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  Speaker 1: if you look at profit at VW down eight six
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  Speaker 1: percent in the first quarter, pretty bad. Is this? Is
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  Speaker 1: this not a surprise or is it even more? Is
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  Speaker 1: it just remind people how bad things are after this
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  Speaker 1: cheating scandal? Yeah, I mean very dramatic drop um, you know,
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  Speaker 1: and and and like you said, volume wise and margin wise,
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  Speaker 1: profitability at some of the other brands a lot to
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  Speaker 1: be thankful for, um that there is a diverse product portfolio,
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  Speaker 1: regional diversity in terms of deliveries. So uh, it is
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  Speaker 1: going to be a very long road, um and not
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  Speaker 1: probably without an entire change in the strategy, maybe even
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  Speaker 1: a move away from from diesel. Very dramatic, and it's
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  Speaker 1: going to take time, but I think there's some some
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  Speaker 1: silver lining there in the strength of some of these
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  Speaker 1: other brands. Kevin, you want to talk about those brands
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  Speaker 1: and then tell me what they're doing to repair, a
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  Speaker 1: fix or buy back those six US vehicles that are
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  Speaker 1: affected by all this, right, and and even once the
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  Speaker 1: US issue is sorted out, and how they're going to
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  Speaker 1: do that and what that winds up costing, whether that's
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  Speaker 1: the eighteen billion or or more, and you know, then
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  Speaker 1: you still have to roll through all the issues in Europe,
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  Speaker 1: and I think him the biggest issue is that is
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  Speaker 1: the question of whether diesel going forward is going to
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  Speaker 1: be the strategy, and not just for VW but what
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  Speaker 1: that means for the other European automakers that are so
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  Speaker 1: dependent on the technology. You know, is this sort of
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  Speaker 1: like the emissions or the pollution genie that's sort of
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  Speaker 1: out of the tail pipe and just you're not going
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  Speaker 1: to get it back in um when we see other
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  Speaker 1: regions US specifically leaning towards hybrids, plug in hybrids and
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  Speaker 1: electric vehicles, Uh, is that sort of the way that
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  Speaker 1: the successful and growing automakers go in the future. So
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  Speaker 1: this is not just about cleaning this mess. This is
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  Speaker 1: and we'll hear more of this later in the month.
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  Speaker 1: Is this a complete change of strategy for Volkswagen going forward?
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  Speaker 1: As an analyst who's covered them for a while with that,
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  Speaker 1: is that? Is it your sense if they had of
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  Speaker 1: volkswag group came to you and said what should I do?
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  Speaker 1: Would you say that's the move to take or would
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  Speaker 1: you say, no, there's still a place for diesel. It's
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  Speaker 1: it has been very popular in Europe, it's gotten more
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  Speaker 1: popular in the U s and it's it could work well,
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  Speaker 1: I think I think it could work. I don't think
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  Speaker 1: it can work in the US. So depending on how
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  Speaker 1: much UH important you want to put towards the US market,
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  Speaker 1: and if you look at them here really have always
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  Speaker 1: struggled to get above three market share in the US
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  Speaker 1: and obviously you know, one of the top two largest
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  Speaker 1: and actually for the court of the largest global automaker
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  Speaker 1: in terms of deliveries. If you don't care about volume
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  Speaker 1: in the US market, then Diesel UH probably can push
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  Speaker 1: through in other regions. But if if they feel like
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  Speaker 1: that the US market, in the North American market is
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  Speaker 1: important to that long term growth, I think they have
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  Speaker 1: to go in another direction. Obviously, Diesel here is you know,
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  Speaker 1: one percent of the passenger vehicle market if not less
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  Speaker 1: um and then you look at the success that Tesla
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  Speaker 1: has had for for what that's worth, and even Toyota
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  Speaker 1: with with katholeene hybrids and and the GM and Ford
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  Speaker 1: with plug in hybrids, it just doesn't seem like Diesel
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  Speaker 1: if it hasn't caught on by now, it's not going to.
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  Speaker 1: So I think you have the value how you value
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  Speaker 1: the US to to lay out the strategy going forward. Kevin,
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  Speaker 1: Volkswagen reported net profits of the quarter that ended March
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  Speaker 1: thirty one of two point five six billions, So they're
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  Speaker 1: still making money. How they do in China? Yeah, China
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  Speaker 1: was a little bit weak, and I think you know
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  Speaker 1: also you look at all the things that they're dealing with,
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  Speaker 1: you know, of their own making. In a lot of cases,
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  Speaker 1: you know, you're still dealing with a very cyclical industry.
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  Speaker 1: Um you're dealing with macroeconomic issues that are unique to
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  Speaker 1: each of the countries and regions that they sell in.
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  Speaker 1: So you look at the results for the core, some
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  Speaker 1: of the brands were strong. Obviously the namesake, the VW
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  Speaker 1: brand was very weak. But now you're gonna be dealing
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  Speaker 1: with potential weakness and demand in their biggest market in China.
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  Speaker 1: You know, some of the European markets, Germany specifically coming
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  Speaker 1: back nicely. But again, by the time they work through
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  Speaker 1: all the diesel emission scandal issues, you know, where is Germany?
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  Speaker 1: Where is the US? Have we peaked? So there's a
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  Speaker 1: lot of figure Kevin, you have to quickly ask you
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  Speaker 1: though you got about the thirty seconds to answer, but
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  Speaker 1: you're talking about plug ins and hybrids, Tesla's annual meeting
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  Speaker 1: later today, the Model three, the Giga factory. What's going
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  Speaker 1: to come out of that? What are you looking for
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  Speaker 1: from the annual meeting? Well, you know he's not one
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  Speaker 1: to uh follow the script and go according to the schedule.
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  Speaker 1: I think the big news came out with the Model
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  Speaker 1: three launch and then his update of his production timeline
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  Speaker 1: after that. I'd be surprised if there was anything other
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  Speaker 1: than reiterating the targets and believing that he can hit
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  Speaker 1: them in the meeting today. Thank you very much for
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  Speaker 1: spending time with us, Kevin Tun and his senior auto
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  Speaker 1: analyst for Bloomberg Intelligence. Shares of Volkswoggen down about one
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  Speaker 1: and a half percent in European trading. The stock is
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  Speaker 1: down two and a half percent so far this year.
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  Speaker 1: Shares of a Tesla right now, they are lower by
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  Speaker 1: just about two tenths of or percent, down four to
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  Speaker 1: two cents at twenty two and twenty two dollars and
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  Speaker 1: sixty three cents. You are listening to Taking Stock. I'm
• 10:48
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