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> 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.