Volkswagen and Bayer with problems – 123fahrschule, on the other hand, with great growth potential

Volkswagen - Struggling with challenges

Volkswagen is currently facing noticeable challenges. Despite a stable leading position in the European market for battery electric vehicles (BEV), the sales situation in 2024 remains under pressure. In the first nine months, the Company recorded a 2.8% decline in global vehicle deliveries compared to the previous year. Particularly weak sales figures in Europe and the especially critical Chinese market are weighing on the result. In addition, BEV sales are also below the previous year's figures, although order numbers in Western Europe are increasing slightly.

Despite the global challenges, there are also positive developments within the Company. The commercial vehicles division, represented by the subsidiary TRATON, was able to post a 5% increase in sales in the third quarter, which highlights strong sales in South America. Nevertheless, sales over the first nine months of the year show a marginal weakening. Particularly encouraging is the penetration of new international markets, which were previously affected by production bottlenecks. These developments underpin Volkswagen's efforts to broaden its base and achieve new successes outside its core markets.

Volkswagen faces the challenge of optimizing its cost structure to secure its market position in the long term. The focus is on measures to increase efficiency and achieve more cost-effective production in order to counter the intense competitive pressure. The Company remains optimistic about the recovery of sales dynamics, particularly through strategic partnerships and investments in new technologies. Nevertheless, the success of these measures remains crucial to achieving the targeted market goals and ensuring the Company's future viability.

123fahrschule – On its way to becoming a market leader

123fahrschule, Germany's largest national driving school, relies on a comprehensive vertical integration strategy. The Company covers the entire value chain: from driving school training to the training of driving instructors and the production of driving simulators by the recently acquired Foerst GmbH. The proprietary software, an important part of this strategy, enables efficient operational management and innovative digital services and is a key to success in the highly fragmented market. Digitization plays a central role not only in the internal organization but also in the range of services offered to students.

On October 14, the German Federal Ministry for Digital and Transport invited industry representatives to discuss the upcoming reform of driving school training in Germany, including the introduction of online theory lessons and the increased use of driving simulators. The Company is ideally positioned to benefit from these changes and to further expand its market position by providing digital learning tools and self-produced simulators. The planned implementation from January 2025 underlines the urgency of the strategic direction and promises significant efficiency gains. The Company's flexibility allows it to pass on some of the higher margins to customers, thereby increasing its market share.

The German driving school market, with a volume of around EUR 2.75 billion and growth of over 16% in recent years, offers considerable potential for consolidation. Many small driving schools with no successors are takeover candidates. 123fahrschule is taking advantage of this opportunity through targeted acquisitions and is benefiting from the increasing attractiveness of regional driving schools as takeover targets. The recently completed and oversubscribed capital increase of 487,556 shares with institutional investors at a price of EUR 2.30 per share shows the high level of confidence in the Company and its growth strategy. The analysts at NuWays see a target price of EUR 7.20 within 12 months. The share is trading at EUR 3.22, well above the capital increase, which is also a positive sign.

Bayer – Renewed focus on litigation

Bayer continues to face extensive legal challenges that are placing a considerable burden on the Company. In particular, the lengthy glyphosate and PCB proceedings remain a financial burden. Despite a short-term victory in Philadelphia, where the US Court of Appeals supported Bayer's stance on warning labels, the Company still faces the threat of substantial compensation payments. Bayer recently lost another glyphosate case and has to pay USD 78 million. In Washington, a PCB case is being re-examined, which increases the uncertainties regarding the future development of these legal disputes. In addition to the lawsuits, the expiring patents in the pharmaceuticals sector are a challenge.

As part of a comprehensive restructuring plan, Bayer is strategically realigning itself to better meet the challenges. Under the leadership of CEO Bill Anderson, significant adjustments have already been made to the organizational model. 70% of the teams are already working under an optimized structure. By the end of the year, this figure is expected to rise to 80-90%. The focus is on streamlining administration and increasing the efficiency of decision-making processes. The aim is to save EUR 2 billion annually from 2025 onwards. The job cuts that have already begun should contribute to this. 6,400 jobs are to be cut this year alone.

One ray of hope for Bayer is the planned expansion of the possible uses for the prostate drug Nubeqa®. The Company has submitted an application for EU approval for a new indication based on the promising results of the Phase III Aranote trial. While Nubeqa® is already approved for several indications worldwide, Bayer hopes the new application will further boost sales and thus compensate for some of the economic challenges. At the same time, however, Bayer must continue to strike a balance between the pressure to innovate and the upcoming patent expiries. These uncertainties are also preventing the share from sustainably reclaiming the EUR 30 mark. Currently, the share stands at EUR 26.105.

Volkswagen and Bayer face significant challenges in a period of economic change, while 123fahrschule shines with growth potential. Volkswagen is struggling with declining sales and is planning rigorous cost-cutting measures to secure its market position. Bayer faces costly litigation and the pressure of expiring patents as it realigns its strategy and implements job cuts to increase efficiency in the long term. By contrast, 123fahrschule is using digital innovations and acquisitions to expand in the fragmented driving school market and to benefit from upcoming reforms.