March 15, 2013 6:54 pm

US fund sells $1.2bn Volkswagen stake

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

Volkswagen received an unwelcome reminder of the dire state of vehicle demand in Europe when one of its largest shareholders jettisoned $1.2bn worth of shares, putting further negative pressure on the stock price of the continent’s largest automotive manufacturer by sales.

The jolt to one of Germany’s most vaunted industrial groups was administered by Waddell & Reed, a US fund manager, which offloaded virtually all its stock in the company, with the sale amounting to just over 3 per cent of VW’s share capital.

Despite a strong commercial performance over the past two years in which the market for cars in Europe has been weak, Volkswagen has unsettled investors in recent weeks by pointing to a bumpy road ahead for the European car market – where deliveries fell sharply last year and with a further decline expected this year.

After tripling in value in three years from January 2009, shares in VW fell 2.64 per cent on Friday to €160.30, continuing the softening of the past month.

The 5.78 million shares were sold on Friday for €158 each, just below the share price close on Thursday, amounted to about 90 per cent of Waddell & Reed’s holding in the company.

On Thursday, addressing VW’s annual press conference, Martin Winterkorn, the company’s chief executive, said: “Without doubt the [global sales] environment is definitely a tough challenge – especially for European carmakers.”

The identity of the seller of the shares was inadvertently revealed by Deutsche Bank – which acted as the bookbuilder for the transaction – after it released a statement saying Waddell & Reed was the seller.

The bank later retracted the part of the announcement naming Waddell & Reed – although without denying that the information was correct.

In Europe – which last year was responsible for 60 per cent of VW’s sales of €192.7bn – the company has easily the biggest market share of any vehicle maker, accounting for one in four of all new cars sold in the continent.

Pete Kelly, managing director of LMC Automotive, a UK-based consultancy said: “As strong as VW is [in Europe] it can hardly fail to feel an impact from the weakness of overall car demand. It’s likely sales will fall again this year and the outlook for next year is not much better.”

Rival carmakers in Europe including Fiat of Italy and PSA Peugeot Citroën and Renault of France have been especially hit, forcing them to reduce jobs and output.

Earlier this year Mr Winterkorn estimated that overall capacity in Europe was 3m vehicles a year in excess of what was needed. However, he insisted VW had no plans to scale back its own production, saying: “What other competitors are doing with this excess capacity, I don’t know.”

VW has been gearing up for a big overall global expansion, supported by a plan to put €50bn into plant investments and technology development over the next three years with much of this spending centred on Germany.

At the company’s giant flagship plant in its home city of Wolfsburg, VW made 800,000 vehicles last year, with planners at the factory pencilling in an output of 1m in 2013, helped by what they hope will be a sales boost provided by the company’s new Golf 7 small car.

Waddell and Reed did not respond to requests for comment on the share transaction. Deutsche Bank and VW declined to comment.

Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in

SHARE THIS QUOTE