Should a Person Invest in Volkswagen Group?

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Volkswagen Group is the name of the company.

Ferdinand Porsche is the founder of the company.

The brand’s origin dates back to the early 30s when the German auto industry offered mainly luxury models. To occupy an empty segment, automakers have been developing mass cars available to a wide range of the population. The official countdown of the Volkswagen company’s history dates from May 28, 1937, when the “Limited Liability Company for the Preparation of the German People’s Car” was created, from September 16, 1938, referred to as Volkswagenwerk GmbH. In the 20th century, the company launched a number of iconic models, including the Volkswagen Polo, Volkswagen Golf, and Volkswagen Passat. The 21st century for the brand was the beginning of the development of electric cars. Like many car companies, Volkswagen’s share price fell when the coronavirus hit. However, it did not take long for the company to recover. Stocks have surged in recent months after Volkswagen outlined its plans to expand its use of electric vehicles.

The company has an estimated net worth of $ 500 billion as of 2021.

Investing in Volkswagen can be considered a smart and reasonable decision. In addition to the release of new electrically powered models, the group’s global manufacturing network is transforming to expand the company’s presence in the electric vehicle market. It actively invests in developing its business in China, the third-largest automotive market in the world. Accordingly, the quality of products, their cost, the introduction of innovative production technologies, and the overall market success are the reasons why people in business should invest in company shares.

The sale of high-tech and environmentally friendly electric vehicles can improve Volkswagen’s economic performance, particularly the profit, which is vital for the shareholders. VW aims to become the global market leader for electric vehicles no later than 2025 (Rauwald, 2021). Significant opportunities underpin Volkswagen’s plans for the electric car industry. Environmental problems that have become especially aggravated in recent years oblige manufacturers to switch to greener technologies. As follows from numerous studies in recent years, electric cars are less harmful to the environment than cars with conventional fuel engines. The electric car industry’s limitless potential will let it maintain premium valuations of the shares of the analyzed company. Electric vehicles entered the market relatively recently; they do not yet have a long market history and, accordingly, impressive statistics on profitability. However, these factors should not be a reason to refuse to invest in a company like Volkswagen. The Volkswagen stock chart from early 2019 to mid-2021 is presented below (Figure 1).

Figure 1. VW daily chart with default indicators (StockCharts, 2021).

Volkswagen invests in research and development to increase its market share. By the end of 2022, the company will allocate more than 34 billion euros for electric cars, autonomous driving, communications, and new mobile services (Geib, 2017). The governments of the largest countries support the principles of ESG – Environmental Social Governance. Therefore, the era of electric vehicles, which has begun quite rapidly, will continue to develop more and more intensively, and investors can capitalize on the growth of quotations of manufacturing companies. Electric cars are not only an environmentally friendly form of transport, but they also provide additional opportunities for getting financial benefits. Given the promising nature of this area, one should invest in this industry right now, especially since there are many tools for direct and indirect financing.

The modern consumer market imposes fundamentally new requirements for the quality of products. In this respect, Volkswagen is a brand that will not diminish in demand, which is a worthy reason to buy a share of the company. Significant resources, experience, well-established technologies for car production give traditional auto concerns a head start over startups. The German Volkswagen is known for its high-quality products all over the world. According to analysts of the Swiss bank UBS, in the coming years, Volkswagen will become the world’s leading manufacturer of electric cars (UBS, 2021). The criterion for obtaining a competitive advantage in the international arena is the quality of the products; Volkswagen vehicles are manufactured in strict accordance with international quality standards. Tech companies like Volkswagen pays high dividends to its investors as the founders are confident that their unique high-tech products will continue to be in demand. When deciding whether to invest in this company, one should pay attention to this circumstance as well. The release of quality products is the best guarantee that the consumer will remain loyal. This is the only way to maintain a competitive advantage in the domestic market and resist foreign manufacturers. Almost all manufacturers and industrial companies engaged in producing similar products compete for the primacy of the indicator of the obtained profit. The highest quality materials are used in the finishing of all parts of the cars produced. These materials are prepared and processed on the most modern equipment and meet the needs of even the most demanding drivers. Volkswagen has high customer loyalty rates; moreover, according to a recent report, this brand is the leader among other European car companies (Volkswagen, 2020). The consummate product quality combined with other indicators of economic activity guarantees customer loyalty to the brand, which ensures people in business that the investment in the company will be profitable.

Investing in a Volkswagen should be considered an economically sound and smart decision. This company is developing according to the realities of the modern world, which require manufacturers to reduce environmental harm. The concern invests in the spread of electric vehicles while maintaining high product quality. However, some investors are not sure of the rationale of such a decision; therefore, it can become a possible reason for refusing to invest in a company. In that case, investors can visit both the official website of the company and get acquainted with the results of independent studies of the company’s economic activities. The electric vehicle industry has tremendous growth potential as all developed countries strive to reduce hydrocarbon emissions. That is why there is a need for investing in a company like Volkswagen. New technologies will reduce the cost of electric cars and make them more accessible, and with the deployment of a network of recharge stations, public acceptance will come. Volkswagen needs to continue to gain customer loyalty and reduce overall costs and defective products by introducing new technologies and the provision of high-quality products. I would advise one to start investing by purchasing several company shares, especially given their relatively low cost. I see Volkswagen as a reliable company with a wealth of experience, quickly and efficiently adapting to changing market conditions. However, despite the seeming reliability of the manufacturer of goods, to assess the need for investment, it is necessary to conduct a multidimensional analysis of activities in the market.