Strategy

The “In China, for China” strategy of the Volkswagen brand is taking on visible form: At this year’s Auto Shanghai (April 23 to May 2), one of the world’s most important motor shows, VW’s three Chinese joint ventures will present electric concept cars. The spotlight is on an electric notchback model from FAW-Volkswagen, an electric SUV in the B segment with extended range due to range-extender technology (EREV) from SAIC VOLKSWAGEN as well as an all-electric SUV from Volkswagen Anhui. All three concept cars embody Volkswagen’s new China DNA – both in terms of technology and design and in relation to development time, which has been cut by more than 30 percent.

The Volkswagen brand is putting its global future plan into action. With an investment of 580 million USD in Argentina, the brand is paving the way for the next generation of mid-size pick-up truck as a successor to the Amarok. The new model will be produced at the Pacheco plant in Argentina from 2027. It is being developed specifically for the South American market and will strengthen the strategically important pick-up segment in this region. The brand’s goal is to be the global technology leader among volume manufacturers by 2030. A key component of this will be expanding the brand’s position in regional markets and developing market-specific product solutions.

The Volkswagen Passenger Cars brand is trimming its Board of Management; subsequent to a pioneer phase for the “New Mobility” division, and in line with plans, the brand is integrating key elements of this division into Technical Development (TE). Led by Kai Grünitz, Volkswagen Brand Board Member for Technical Development, all development activities for future technologies and vehicle architectures (MEB and SSP) have already been bundled. The development division also steers development volumes for ICE model series (MQB). In future, responsibility for series technical project management will rest exclusively with TE. In the context of the brand’s performance program, this course of action supports the further optimization of development processes in Wolfsburg and helps shorten development times. New software development processes for electric vehicles based on the MEB were specifically tested and established in the “New Mobility” division. The transfer of these activities to the MQBevo has already taken place as planned, and the “New Mobility” division’s mission has been accomplished. Thomas Ulbrich, Volkswagen Brand Board Member for “New Mobility” since 2022, has been named the Volkswagen Group’s Head of Development in China effective April 1, 2024.

The Volkswagen brand has achieved an important milestone in the “Accelerate Forward/ Road to 6.5” global performance program, with management and employee representatives reaching agreement on key points to streamline the company, following intensive negotiations. The objective of the three-year program is to secure the Volkswagen Group’s core brand competitiveness, ensure it is future-proof and sustainable in the long term. The Volkswagen brand aims to make a positive earnings contribution totaling ten billion euros by 2026, also to offset negative effects such as inflation and higher raw material costs. The operating return on sales is expected to improve sustainably to 6.5 percent in 2026. The Volkswagen brand projects that the program will deliver positive earnings contributions of up to four billion euros as early as 2024. To achieve this, the Company concentrates on performance-enhancing and cost-saving measures in the program’s three focus areas: optimizing material and product costs, reducing fixed and manufacturing costs and increasing revenues. The Company and the employee representatives have also reached agreement on staff reduction measures to cut personnel and labor costs. These measures will apply throughout Volkswagen AG. As such, from January 2024 the Company will extend its partial retirement schemes to all employees born in 1967 (and for severely handicapped employees born in 1968), to reduce administrative staff costs in particular. The current hiring freeze and access freeze to the Tarif Plus salary group will continue until further notice.

The Volkswagen brand is preparing its Germany-based production network for the future. At a meeting today, the Group Board of Management informed the Supervisory Board of the Volkswagen Group about its vehicle allocation plans for the brand through 2028. In taking this step, the company has set its sites up for profitable capacity utilization and the economic perspective of the coming years. Efficient vehicle allocation and increased productivity are key aspects of the performance program ACCELERATE forward | Road to 6.5 initiated by the brand.

The Volkswagen brand aims to make significant gains in South America with a major product offensive. By 2027, the company plans to grow by 40 percent in Brazil, the region’s largest market. For example, 15 new electric and flex-fuel vehicle models are being launched by 2025 alone. Hybrid vehicles will also follow in the medium term. Before the end of 2023, the company is bringing its first fully electric models to Brazil – the Volkswagen ID.4. and the ID. Buzz. In total, the South American automotive market is expected to grow 11 percent a year until 2030 – making it one of the fastest growing markets in the world. The company is thereby systematically implementing its strategy to rapidly expand its business in growth markets and to intensify sustainable mobility. Volkswagen is celebrating its 70th anniversary of foundation in Brazil these days.