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Financial analysis of the Volkswagen Group from financialization point of view (1991-2007)
Submitted by Julio Julio Castellanos, Universidad Nacional Autónoma de México on 13 janv. 2014 - 04:48
Type de publication:Conference Paper
Source:Gerpisa colloquium, Paris (2014)
The present work aims to highlight how financialization can explain some of the main paths that the Volkswagen Group has taken in its historical trajectory. Financialization is defined as the predominance of macro and microeconomics of finances, in which the economy and the companies make their productive endeavor subject to the financial aspect, favoring the increase in the value of the shares and of the financial relationships that are exemplified in the acquisition and fusion of companies.
Volkswagen has its origin as a company that is made up 100% of state resources -the nazi regime founded it in 1936- and contributions from worker fees . When the War ends, it becomes part of the negotiation to indemnify the allies after the destruction made by Germany; the property is given back to the Federal Republic of Germany in 1948, in that the federation gives it to the State of Lower Saxony, which remains the owner of 13% of the shares and 20% of rights of voting.
Throughout 65 years -1948 to 2013- during which there have been eight Presidents in the Board of Directors of VW AG, vehicle assembly plants have been installed in more than ten countries in the five continents and big automotive companies have been acquired, such as Auto-Union (manufacturer of the Audi brand), Skoda, SEAT and Bentley, until 2007; afterwards, they acquired Bugatti, Lamborghini, Ducati, Porsche, Scania and MAN, which nowadays have more than 90 assembly plants in the world with five hundred and fifty thousand employees.
The financial analysis shows that the growth of the financial assets in the 1991-2007 period was of 204%, which is far greater than the 31% growth in the fixed assets. In the same period, the sales revenue (vehicles, components and financial services) grew 104%, which contrasts with the 19% increase in jobs and 10% in salaries.
Volkswagen Financial Services, subsidiary of VW AG, grew in its financial assets from 1994 to 2007 (14 years) by 413% and 259% in the total liabilities; the number of employees increased by 172%.
The main implication of these facts is that by reducing both wages and the number of workers, it is affecting the consumption of automobiles. What has happened in Western Europe and America. The way to compensate is to seek new growth markets, such as China where are going all carmakers, primarily VW