3 ms·

It's not really about units sold though is it? I guess yes, usually it's a good approximation, but you could sell a single unit for $5bn and have a superior net

It's not really about units sold though is it? I guess yes, usually it's a good approximation, but you could sell a single unit for $5bn and have a superior net profit. Tesla's profit margin looks to be ~15%, whilst VW is at 3% - I'd love to know what it does to those numbers. Tesla's net income for Sept 2022 actually appears to be much higher than VW, if I am interpreting the numbers correctly.

jacquesm 4y ago
Usually profit margins shrink as volume goes up. You can't sell that many cars into the premium segment simply because the segment doesn't support the volume. VW sells a ton of cheap and small vehicles.
- snovv_crash 4y ago
  > VW sells a ton of cheap and small vehicles Which inflates their unit numbers, exposes them to downturn risk, and doesn't really do much for their bottom line.
  - jacquesm 4y ago
    > Which inflates their unit numbers No, they are real sales. > exposes them to downturn risk On the contrary, those models are the most successful ones during an economic downturn. > and doesn't really do much for their bottom line On the contrary, those models are the mainstay of their business. Really, three out of three, why bother?
    - snovv_crash 4y ago
      Real sales, yes, but this is why comparing sales by units doesn't mean very much relative to stock price. Tesla has ~25% margins, VW has 3% margins. A recall, unsold stock or component shortages can quickly put VW in the red. This is what I mean by downturn risk, economic downturn is not the only potential problem manufacturing companies run into. > Really, three out of three, why bother? This level of communication isn't constructive.
      - jacquesm 4y ago
        Tesla has 25% margins because they are in a different segment. If Tesla sold a large number of very cheap cars they would not be able to command 25% margins. If you lop off the top portion of VW's sales and look at their margins they will be much higher than the margins on the smaller stuff. But in absolute numbers those figures certainly help and they also help to protect VWs income stream during slow years. Their premium brands tend to be hit very hard during those years (Porsche, for instance).
        snovv_crash 4y ago
        > because they are in a different segment. Yes, and this is exactly why comparing stock prices and expecting them to match units sold isn't useful.
- mutatio 4y ago
  Isn't net profit absolute though, i.e. directly comparable between the two organisations. Long tail of cheap vehicles probably does help VW stay resilient long term (perhaps in the current economic climate / recessions). It seems targetting volume could be detrimental to net profits under current/recent market conditions. Selling fewer, supposedly more upmarket vehicles has allowed Tesla to out perform VW.
  - jacquesm 4y ago
    They're simply different companies. VW is fairly broad spectrum when it comes to cars, even a Mercedes 'A' class (or a Smart for that matter) is fairly expensive compared to an entry level VW (say, an 'Up'). Tesla outperforms VW because they are riding a wave and have been very successful in maintaining their lead in BEVs. That won't last and then the likes of VW and possibly Toyota if they ever get with the times are going to eat Tesla's lunch, especially if the chief twat is going to be distracted by his new toys.
    - KptMarchewa 4y ago
      VW also owns some strictly cheaper brands like Skoda.
- mpol 4y ago
  So then BMW and Mercedes: BMW - Market cap: $58.47 billion - Q3 units sold: 587,795 Daimler - Market cap: $85.59 billion - Q3 units sold: 517,800
Eddy_Viscosity2 4y ago
The bigger the margins, the more room there is to be undercut from competitors. This is a fundamental property of the free market. When* it works, margins reduce. *I say 'when' here because too many counter-examples non-functioning markets to list.

jacquesm 4y ago

Usually profit margins shrink as volume goes up. You can't sell that many cars into the premium segment simply because the segment doesn't support the volume. VW sells a ton of cheap and small vehicles.

snovv_crash 4y ago
> VW sells a ton of cheap and small vehicles Which inflates their unit numbers, exposes them to downturn risk, and doesn't really do much for their bottom line.
- jacquesm 4y ago
  > Which inflates their unit numbers No, they are real sales. > exposes them to downturn risk On the contrary, those models are the most successful ones during an economic downturn. > and doesn't really do much for their bottom line On the contrary, those models are the mainstay of their business. Really, three out of three, why bother?
  - snovv_crash 4y ago
    Real sales, yes, but this is why comparing sales by units doesn't mean very much relative to stock price. Tesla has ~25% margins, VW has 3% margins. A recall, unsold stock or component shortages can quickly put VW in the red. This is what I mean by downturn risk, economic downturn is not the only potential problem manufacturing companies run into. > Really, three out of three, why bother? This level of communication isn't constructive.
    - jacquesm 4y ago
      Tesla has 25% margins because they are in a different segment. If Tesla sold a large number of very cheap cars they would not be able to command 25% margins. If you lop off the top portion of VW's sales and look at their margins they will be much higher than the margins on the smaller stuff. But in absolute numbers those figures certainly help and they also help to protect VWs income stream during slow years. Their premium brands tend to be hit very hard during those years (Porsche, for instance).
      - snovv_crash 4y ago
        > because they are in a different segment. Yes, and this is exactly why comparing stock prices and expecting them to match units sold isn't useful.
mutatio 4y ago
Isn't net profit absolute though, i.e. directly comparable between the two organisations. Long tail of cheap vehicles probably does help VW stay resilient long term (perhaps in the current economic climate / recessions). It seems targetting volume could be detrimental to net profits under current/recent market conditions. Selling fewer, supposedly more upmarket vehicles has allowed Tesla to out perform VW.
- jacquesm 4y ago
  They're simply different companies. VW is fairly broad spectrum when it comes to cars, even a Mercedes 'A' class (or a Smart for that matter) is fairly expensive compared to an entry level VW (say, an 'Up'). Tesla outperforms VW because they are riding a wave and have been very successful in maintaining their lead in BEVs. That won't last and then the likes of VW and possibly Toyota if they ever get with the times are going to eat Tesla's lunch, especially if the chief twat is going to be distracted by his new toys.
  - KptMarchewa 4y ago
    VW also owns some strictly cheaper brands like Skoda.
mpol 4y ago
So then BMW and Mercedes: BMW - Market cap: $58.47 billion - Q3 units sold: 587,795 Daimler - Market cap: $85.59 billion - Q3 units sold: 517,800

Eddy_Viscosity2 4y ago

The bigger the margins, the more room there is to be undercut from competitors. This is a fundamental property of the free market. When* it works, margins reduce. *I say 'when' here because too many counter-examples non-functioning markets to list.