Freedom Broker: Strategy through 2030 may open a new growth route for Volkswagen

Implementation of the large-scale development program through 2030 will become a new fundamental driver for Volkswagen Group (VOW3) shares, according to Freedom Broker analysts. Streamlining the model range, reducing business complexity, and focusing on profitable areas should strengthen the automaker’s financial base amid challenging market conditions.

Read more in the biweekly market review No. 353 on the Freedom Broker website.

About the company

Volkswagen Group is a German automotive group that объединяющий passenger and commercial brands, manufacturing facilities, and a financial services division. The company operates in the largest automotive markets, including Europe, China, and North America.

Out of 26 investment banks covering Volkswagen shares, 14 recommend buying, 10 recommend holding, and two recommend selling. The average target price for VOW3 is €102,36. Berenberg and Citi set a target of €100, while Barclays set €120. The percentage upside potential in the presented review is not calculated.

The strategy envisions Volkswagen’s largest transformation

Implementation of the development strategy through 2030 will become a new fundamental growth driver for Volkswagen shares, Freedom Broker analysts note. The plan approved by the supervisory board has become the largest program in the group’s history in terms of strategic scale. Its goal is to make the group and its brands more resilient and competitive.

Volkswagen plans to strengthen its financial base and reach annual sales of 9 mn vehicles while simultaneously increasing operating profit. By 2035, the company intends to reduce its model range by about 50% and the complexity of the models offered by approximately 75%.

The group’s core business is to be optimized by roughly one third. The portfolio will retain only assets that make a clearly positive strategic and financial contribution. Non-strategic areas will be sold or refocused. Changes will also affect the real estate portfolio.

North America and China will retain strategic importance

Volkswagen’s plan предусматривает further business development in North America with a focus on the most profitable segments. In China, the group intends to revise its growth targets in the local market.

The need for transformation is confirmed by sales dynamics. In the first half of 2026, deliveries of Volkswagen Group vehicles, including non-consolidated joint ventures in China, fell 6,3% y/y to 4,1 mn units. Declines in North America and the Asia-Pacific region were accompanied by growth in Europe and South America.

Deliveries of fully electric vehicles decreased 5,8% y/y to 438 ths versus 466 ths a year earlier. Their share of total deliveries remained at 10,6%. For full-year 2026, Volkswagen expects customer deliveries to decline by 7,0–3,0% versus the 2025 result, when the group sold 9,0 mn vehicles. The forecast revision is linked to a significant decline in China’s automotive market.

Revenue held at last year’s level

Volkswagen Group revenue for the first half amounted to €158,102 bn versus €158,364 bn a year earlier. Gross profit fell to €24,206 bn from €26,402 bn. Operating profit declined to €5,931 bn versus €6,707 bn, and operating return on sales to 3,8% from 4,2%. The result was affected by costs of about €0,5 bn related to adjustments to the Volkswagen Passenger Cars brand’s production strategy in the U.S. and the discontinuation of ID.4 production in the country in mid-April 2026, as well as an unfavorable change in the sales mix.

Profit before tax decreased by €1,6 bn to €4,773 bn from €6,423 bn. Net profit fell by €1,4 bn to €3,103 bn versus €4,477 bn a year earlier. Profit attributable to Volkswagen AG shareholders amounted to €2,574 bn versus €4,005 bn. Basic and diluted earnings per ordinary share decreased to €5,11 from €7,97, and per preferred share to €5,17 from €8,03.

The Automotive Division improved cash flow

Revenue of the Automotive Division in January–June declined to €139,733 bn from €142,730 bn. The figure was affected by lower deliveries of vehicles and components to China, currency effects, and changes in the sales mix.

The division’s operating profit was €4,739 bn versus €4,769 bn, while operating return on sales increased to 3,4% from 3,3%. Results for both periods included a negative impact from U.S. import tariffs of €1,3 bn.

The Automotive Division’s net cash flow improved to €3,166 bn versus a negative result of €1,350 bn a year earlier. Gross cash flow increased to €14,340 bn from €13,015 bn, and cash inflows from operating activities to €12,963 bn from €10,410 bn. Capital expenditures decreased to €5,508 bn from €6,338 bn. The investment ratio, combining research and development expenses and capital expenditures, declined to 10,6% from 11,4%.

At the end of June, the Automotive Division’s net liquidity amounted to €32,750 bn versus €34,5 bn at the end of December 2025. In June, Volkswagen AG, Porsche AG, and TRATON SE paid shareholders dividends totaling about €2,7 bn.

Not an individual investment recommendation.