Crashing out
Volkswagen takes a detour
Good morning, automotive enthusiasts. This is your Stock Market Rundown for November 8th, 2024. Thanks for riding along with me. Let’s get moving:
TODAY’S TOP STORY: BEETLE BURDEN
For Americans, the most familiar names in the car business are Ford, GM, and Chrysler. But many don’t realize that a German automaker dwarfs the Detroit Three. Volkswagen, headquartered in Lower Saxony, is the world’s #2 largest car manufacturer—right behind Toyota.
Volkswagen had a stunning rise to prominence in the 20th century, starting out as a state project in 1930s Germany to build a “people’s car”—a vehicle affordable to the average German family.
The company’s first engineer was Ferdinand Porsche, and the car he designed was the ugly yet iconic Beetle. Mechanically simple and shockingly reliable, the Beetle was adored by everybody from German middle-class families, to American hippies hitting the road for Woodstock.
In the following decades, Volkswagen produced many other iconic models, like the Passat and Golf, which occupied suburban driveways from Berlin to Baltimore. The automaker was early to enter China (via a joint venture in 1984) and became a status symbol for Chinese consumers.
But these days, Volkswagen has gone from motoring along, to running out of gas. The problem? Factories that have the productivity level of the sloth cage at the zoo.
The CEO, Oliver Blume, says the company needs to fix “decades of structural problems” and adapt to flagging demand in key markets.
So, management is bringing down the hammer. Volkswagen will shut three factories in Europe, and lay off tens of thousands of employees. Those lucky enough to keep their jobs will have to swallow 10% cuts to wages, a two-year wage freeze, and caps on bonuses.
As you can guess, employees are not too happy with this, and are threatening to strike. But Volkswagen says the extreme austerity is a must to save jobs and stay competitive in the cutthroat auto market. While Volkswagen was once the symbol of freedom on wheels, now it’s just trying to avoid reversing into a brick wall.
SO WHAT ELSE IS GOING ON?
Disney is launching a new business unit to bring artificial intelligence into its content and theme parks. Nothing says “magical” like a robotic chatbot telling you the line for Space Mountain is three hours long.
Las Vegas hotel operator MGM Resorts missed expectations due to weak sales at Vegas casinos. Guess everybody decided to skip seeing Celine Dion at the Colosseum, and place parlays on FanDuel from their La-Z-Boy lounger instead.
Peloton has appointed a former Apple executive as its new CEO as it attempts to fix its flagging business. From now on, every Peloton bike will prompt you to do a mandatory operating system update right before you work out.
PepsiCo beat a lawsuit from New York City that accused the snack maker of polluting because of its single-use packaging. Why not be part of the solution and turn your empty Tropicana Juice carton into a birdhouse?
That’s it for today, my friends. Have yourselves a wonderful weekend, and I will catch up with you next week. Yours in capitalism, The Axe
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