VW almighty?

Apparently, VW achieved a profit of 4.7 bn € in 2008. Compare that to GM's loss of 30 bn $. Toyota's numbers are not out yet (fiscal year ends in 3/09), but it has flagged an estimated loss of 3 bn €.

How does VW do it?

Not sure, but it probably helped that its core markets are Europe, Brazil and China, and the car crisis arrived rather late in Europe, only the last 2 months of 2008 were really bad (and Brazil is only now starting to slow down). Exposure to the US market, where demand dropped much earlier, is quite limited. Still, a record profit (up 15 % compared to 2007) is impressive. Unfortunately, their detailed financial statements are not out yet, so it's impossible to analyze their results in more detail (strange: vehicle production increased 2 %, whereas staff head-count increased 12 %; also, it's not clear how the Scania-acquisition is treated in those numbers). Oh, and they did flag that Q1 might see them dip into the red.

As for market values:

According to Bloomberg, VW is currently worth 60 bn € (this should include the preference shares, but I didn't check). That's still be quite an impressive P/E of 13 based on record 2008 profits that can only go down from here. Not exactly a bargain, I'd say. Oh, and VW's stock is still up 25 % compared to one year ago (it dropped 80 % from its peak in October, but that was a surreal episode anyway).

Must be speculators hoping that Porsche will keep buying. Can't see any other reason why the stock price is so high. (By now, free float is probably quite small, though. Any small investor who didn't decide to sell last October made a horrible mistake anyway...)

Toyota is worth even more, close to 90 bn €, significantly more than its book equity. Doesn't look cheap either, but it's true that they've had a history of strong profitability. Still, it's hard to call the stock "cheap", in spite of a 43 % drop year-on-year.

GM, on the other hand, can be acquired for a mere 1.2 bn €. Quite amazing that people are still willing to pay money for GM stock: Considering a net equity of -70 bn $, and yet another large loss coming up in 2009 (if they somehow manage to survive the year), the likelihood of ever getting back into positive territory looks tiny. But so is GM's market value relative to VW and Toyota. Even far-out-of-the-money options still have a value... "Strong buy" recommendation anyone?