Risks arising from changes in demand
As a result of the diesel issue, the Volkswagen Group may experience decreases in demand, possibly exacerbated by media reports.
Consumer demand is shaped not only by real factors such as disposable income, but also by psychological factors that cannot be planned for. Unexpected buyer reluctance could stem from households’ worries about the future economic situation, for example. This is particularly the case in saturated automotive markets such as Western Europe, where demand could drop as a result of owners holding on to their vehicles for longer. We are countering the buyer reluctance with our attractive range of models and systematic customer orientation.
A combination of buyer reluctance in some markets as a result of the crisis and increases in some vehicle taxes based on CO2 emissions – as already exist in many European countries – may shift demand towards smaller segments and engines. We counter the risk that such a shift will negatively impact the Volkswagen Group’s earnings by constantly developing new, fuel-efficient vehicles and alternative drive technologies, based on our drivetrain and fuel strategy.
Automotive markets around the world are exposed to risks from government intervention such as tax increases, which curb private consumption, or from protectionist tendencies.
Commercial vehicles are capital goods: even minor changes in growth rates or growth forecasts can significantly affect transport requirements and thus demand. The production fluctuations arising as a result require a high degree of flexibility from manufacturers. Although production volumes are significantly lower, the complexity of the trucks and buses range in fact significantly exceeds the already very high complexity of the passenger cars range. Key factors for commercial vehicle customers are total cost of ownership, vehicle reliability and the service provided. In addition, customers are increasingly interested in additional services such as freight optimization and fleet utilization, which we offer in the commercial vehicle segment through the newly established digital brand RIO, for example.
MAN Power Engineering’s two-stroke engines are produced exclusively by licensees, particularly in South Korea, China and Japan. On account of volatile demand in new ship construction, there is excess capacity in the market for marine engines, which may result in a decline in license revenues and bad debt losses. Due to changes in the competitive environment, especially in China, there is also the risk of losing market share. We address these risks by constantly monitoring the markets, working closely with all licensees and introducing new technologies.
Dependence on fleet customer business
Viewed over an extended period, the fleet customer business is generally more stable than the business with retail customers; in 2018, it continued to be characterized by increasing concentration and internationalization.
The Volkswagen Group is well positioned with its broad portfolio of products and drive systems, as well as its target-group-focused customer care. There is no concentration of default risks at individual fleet customers or markets. The high market share in Europe shows that fleet customers still have confidence in the Group.