Thread by @jpr007

THE STRANGE CASE OF VW GROUP

In 2020 the corporate entity that we think of as the VW Group sold 5.580 million vehicles

In 2010, ten years earlier, the same VW Group corporate entity sold 5.407 million vehicles

- basically this company has seen no volume growth over the last decade

In 2010, this VW Group corporate entity was funded by Debts and other Liabilities of €150.681 billion

In 2020, this same VW Group corporate entity was funded by Debts and other Liabilities of €368.331 billion

- that is an increase in Debt and Liabilities of +€217.650 billion

- for essentially no increase in units sold

VW Group seems to be a massive consumer of Other People's Money

Now imagine that instead it had used its businesses more wisely to generate positive Cash Flows and pay its Debts and Liabilities as they became due

If it had held those Debts and Liabilities at the same level as 2010 they would be nearly 60% lower

And its residual Equity value or Market Cap would logically be +€218 billion higher

- or nearly €350 billion in total

That means nearly 2.7x higher than it is today

VW is an extraordinary case study

- how to become hugely dependent on Debt and other Creditors

- and how to compromise the corporate value to Shareholders

They do not now appear to be in a position to repay those Debts and other Liabilities

- so their Creditors become the real owners of the business