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I'm just reading the Barbarossa AAR I'm a bit confused here, when you buy a ship, its not one ship its a group of ships is that correct, or does one name equals one ship?

It is a group, generally 1 capital ship plus 3-5 destroyer escort, see 10.7 (pg 51-53) in the manual.

It is usually a capital ship with escorts or pack of submarines

Remember ... even though it is a group, it is still represented by one icon and one photo.

But can't there be several groups in a fleet, this is the bit that confuses me.

Yes, one fleet can have unlimited number of groups.

To clarify.
You are purchasing/building groups, which joins to and operates as fleets.
Fleet must have at least one group.

Doom,

When you assign a commander to a naval group, does it only command the "group" to which it is assigned

or

does the commander affect the entire "fleet" that it is in.

Thanks in advance.

Only the group.

During the naval battle only the group.

On the main map, whole fleet.