Good morning ladies and gentlemen,
Welcome to the Markenhochhaus, our Brand Tower.
You have been on the road for Volkswagen a lot recently. Many of you were in Berlin yesterday for the Group's annual press conference. Today, we have invited you to Wolfsburg, into the heart of the Volkswagen brand.
We have a very good year behind us, and a decisive phase for our brand. We are here today to talk to you about the progress we have made with our strategy and where our journey is taking us.
You are aware of our plan of how we are leading Volkswagen into the future: The first step involves restoring our core business. By 2020, we aim to position our brand as top of volume and become the leading volume manufacturer. To reach this goal, we are investing in new products, repositioning the regions, increasing our efficiency and expanding our expertise in the technology of the future. In the second step, we are launching our electric offensive. We aim to be the global leader in e-mobility by 2025 at the latest. At the same time, we are making steady progress in our preparation for autonomous driving. And the final step in the plan is our transformation from an automobile manufacturer to a provider of holistic mobility solutions.
What did we do in the past fiscal year?
In 2017, we made important progress. The implementation of our strategy TRANSFORM 2025+ delivers results. From the Zukunftspakt to the model and technology offensive and regional strategies, all initiatives are helping Volkswagen move forward.
Our customers also see us as fit for the future again. In the latest image survey by auto motor sport, Volkswagen has once again gained in popularity in terms of the question regarding which automotive brand is the latest trend. The downturn seems to have passed – and we will continue our concerted efforts to regain the lasting trust of our customers and the general public.
My thanks goes out to all employees around the world – in Germany, China, Latin America, the USA, Mexico and many other countries. They have all done an extraordinary job last year. And they have demonstrated how strong this team is, under difficult circumstances. I am proud of them!
Ladies and gentlemen,
We have improved in all our key financial performance indicators, and in some cases significantly. Last year we delivered a total 6.23 million vehicles to our customers – more than ever before. In China alone, our largest single market, we delivered 3.2 million vehicles. Never before in China – or in another market for that matter – has an automotive brand sold more vehicles. And as many as three Volkswagen vehicles including the Golf, Tiguan and Polo are among the ten best-selling vehicles in the world.
We were also able to improve sales and earnings. Revenue was around 8 percent higher than the previous year at 80 billion euros. Operating profit improved by 77 percent to 3.3 billion euros before special items. With this, earnings increased again for the first time in five years and we make a significant contribution to the Groups improvements.
With an operating return on sales of 4.1 percent, we are right on target. We are aiming for at least 6 percent return on sales in the long term to be well prepared for the future on a sustainable basis. This all demonstrates that our strategy TRANSFORM 2025+ is working.
Our new models are the key driver of this upward trend. Over the past year, we put 19 new vehicles on the road – and determined model rollouts on a monthly basis for the upcoming years. By 2020, we will have almost completely renewed our product range and expanded in key areas. Our development team is currently working on 55 new models.
At the forefront of our model range is the Arteon, representing the new flagship of Volkswagen in terms of technology and design. It even stood up to the premium competition at the "Goldenes Lenkrad" awards.
The Arteon will also be launched in the USA and in China this year. We will also offer the Arteon as a shooting brake option – which is a coupe with hatchback and even more usable space.
With the new sixth-generation Polo based on the MQB toolkit, we are setting the standard in the small vehicle segment. In particular the design, technology and smooth handling performance have been well received. The Polo is currently sweeping up one test victory after another. In Brazil, it was recently awarded the Car of the Year trophy. And at the end of January, the Polo was recognized in the Best Cars award in auto motor sport.
In addition to the normal variants, we also offer the Polo as a GTI. Based on the MQB toolkit, the Polo is now a real GTI – with a rigid body, dynamic suspension and delivering more than 200 PS.
The up! GTI is a new member of the GTI family. In terms of size and performance, it almost mirrors the original GTI – but now with modern TSI technology and intelligent connectivity. The up! GTI is also the first vehicle of our brand to be type approved based on the new WLTP test cycle. I am pleased that with these three models, we now have a strong GTI offering in the small and compact vehicle segment.
We have launched into a new segment with the T-Roc. Our new lifestyle SUV is highly acclaimed and is making its debut at the right time: By 2027, the market for small and compact SUVs is expected to double to 11 million vehicles worldwide, and with the T-Roc, we are well prepared. The demand is already so high that we are expanding production to run on a four-shift schedule. This will make the manufacturing plant in Palmela, Portugal one of the most productive plants of our brand.
The Tiguan plays a leading role among our SUVs, with an increase in sales by 200,000 units within one year. With a total of 720,000 deliveries, the Tiguan has undoubtedly become a global best seller, sitting among the top 3 SUVs globally. The Tiguan is now produced in Germany, China, Mexico, Russia, India and Malaysia – and demand is increasing. In markets such as Canada, the Tiguan is already the best-selling Volkswagen.
Ladies and gentlemen,
SUVs are a key driver of growth for our brand in terms of unit sales and earnings. That is why we are expanding our offering substantially.
Last year we increased the SUV share of our portfolio from 10 to 14 percent. Every seventh Volkswagen sold is now an SUV. As of February, this share is already 54 percent in the USA. By 2020, we will have 19 SUV models in our lineup – from small vehicles the size of the Polo to large full-sized models.
Our excellent products are also a source of the significant upward trend in the regions. In 2017, we repeatedly outperformed the market – underpinned also through our turnaround program.
In the USA, our brand grew by 5 percent in an overall shrinking market – the new Atlas is one example that performed very well in these circumstances. With this SUV, we occupy a core segment in which we previously did not have a presence. The Atlas has been very well received – and was recently voted the best vehicle in the USA. With this, we are setting an important stage for our comeback in the States. In the medium term, we intend to become a leading volume provider and aim for around 5 percent market share.
On a global scale, our aim is to position Volkswagen at the top of volume in all major regions of the world. This means that every model will strengthen our resolve to hold the leading position in the volume segment in terms of quality and technology.
Our progress towards this goal is demonstrated by the achievements in Brazil.
After successful completion of our restructuring efforts, we have grown by almost 20 percent in the most important market in South America – double the growth of the overall market.
The new Polo has become the fourth best seller in Brazil within only a few months. It's making an impact on the market – also thanks to its superior technology. We have equally high expectations for the Virtus. Like the Polo, the fastback model is also based on the MQB toolkit and will soon be introduced.
Up to 2020, we are investing around 1.75 billion euros in renewing our product range in Brazil. Our aim is to regain our leading position with a rejuvenated portfolio. In 2018, we anticipate a further boost in unit sales and an increasing market share.
Looking at the global markets, China plays a particularly key role for Volkswagen. Here, in the largest automotive market in the world, we remain in the top position with a market share of around 13 percent. And during 2017, we again expanded our market share in a tough competitive environment and a growing local automotive industry.
SUVs are also in high demand in China, where we delivered 400,000 units last year. Of these, almost every seventh SUV was a Teramont. The twin-sister of the Atlas celebrated as large a success in China as in the USA.
Ladies and gentlemen,
We are very pleased with the achievement in sales in 2017. It is, however, crucial that we are profitable with our vehicles. As you know, we had some catching up to do in this regard, and still do.
That is why we signed the Zukunftspakt. One of the things we have agreed with the Works Council is a positive impact on earnings of 3.7 billion euros by 2020, of which, Germany will account for 3 billion euros. As of today, we have already achieved 2 billion.
In addition, we have significantly improved productivity at our sites, whereby Salzgitter, Kassel and the Tiguan production at the Wolfsburg plant have all exceeded their agreed annual targets. This is a positive interim result. Nevertheless, there is still work to be done. By 2020, we intend to improve productivity by a total 25 percent. This year, we are headed towards another 7.5 percent, and in 2019 and 2020 another 5 percent each year.
At the same time, we are optimizing value creation at our sites. This entails shutting down areas of business that are not compatible with future trends – such as the production of industrial engines and combined heat and power plants in Salzgitter or of plastic parts in Brunswick – and instead, investing in new areas of expertise.
We have already created 115 jobs through the pilot manufacturing of battery cells and with electric vehicles. The aim is for 300. Likewise, we are adding 400 jobs – mainly internal staff – in Braunschweig, where the battery system for our new electric architecture will be manufactured.
We have made good progress so far in this area thanks to the support of our employees. The Zukunftspakt ensures our sites are at capacity and secures jobs long term.
We have also addressed costs with the same level of discipline. Even though we are in the midst of the largest model offensive in Volkswagen's history, we have largely kept fixed costs stable as envisaged for the second year in a row. Product costs were even reduced – despite offsetting effects such as the higher steel price. An example here is the Wolfsburg plant, which reduced costs related to the Golf by 100 euros per vehicle – for the first time in many years and under significant quantities.
Our modular assembly matrix is becoming an increasingly important driver of efficiency and competitiveness. With the MQB toolkit, we are executing outstanding technology solutions at good production costs – and using innovations in our vehicles more quickly and more cost efficiently than the competition.
Last year, around 40 percent of all brand vehicles delivered were based on the MQB toolkit – that is twice as many as in 2015. The best example is the new Polo. Around the world, the Polo is based on the MQB toolkit.
This year, our share of MQB-based vehicles will already be around 60 percent. By 2020, our quota is set to increase to around 80 percent. Considerable economies of scale and thus cost savings are still up for grabs – which will have a positive impact on earnings for our brand.
We are also utilizing the modular assembly matrix approach with our future electric vehicles. Two years ago, we set out to develop the new MEB, our modular electric drive matrix. The MEB leverages the advantages of the electric drive system in terms of fuel range, functionality, design and cost – and sets a new standard in e-mobility.
Development is underway at full speed, and we are currently right on schedule. We intend to use the MEB throughout the Group and rapidly scale its application. As planned today, we will use it for 27 models from four brands. China will be the volume base for our electric architecture. For this purpose, in November, we signed agreements with our joint venture partners in China.
And now, ladies and gentlemen, I'd like to hand over to Arno Antlitz, who will present the financial figures on fiscal 2017 in more detail.