CMD23: Volkswagen Group Unveils Strategic Realignment and Performance Programs to Boost Profitability and Cash Flow: Priority is value over volume

Volkswagen Group Unveils Strategic Realignment and Performance Programs to Boost Profitability and Cash Flow: Priority is value over volume

(IN BRIEF) Volkswagen Group has announced a strategic realignment and the launch of performance programs to enhance profitability and cash flow. At its Capital Markets Day, the Group emphasized leadership principles focused on customer orientation and entrepreneurship. Each brand will have direct responsibility for financial targets, and a shift from volume growth to sustainable value creation will be prioritized. The Group will optimize its architecture, battery, software, and mobility services to leverage economies of scale. Additionally, investments will be concentrated on lucrative profit pools globally, with refined strategies for key markets. Volkswagen Group aims to achieve a strategic return on sales between 9% and 11% by 2030.

(PRESS RELEASE) WOLFSBURG, 21-Jun-2023 — /EuropaWire/ —  Volkswagen Group (ETR: VOW3), one of the world’s leading manufacturers of automobiles and commercial vehicles, has announced a focused strategic realignment at its Capital Markets Day, highlighting key leadership principles centered on customer orientation, entrepreneurship, and team spirit. The Group has delegated responsibility for return targets to its individual brands as part of an effort to strengthen profitability, cash flow, and reduce capital intensity. Each brand will initiate its own performance program, marking a shift from pure volume growth to sustainable value creation under the principle of “value over volume.” Furthermore, the Group is reorganizing its architecture, battery, software, and mobility services to optimize economies of scale. Investments will be concentrated on the most lucrative profit pools globally, with refined strategies for growth markets such as China and North America. With these brand-focused initiatives, the Group is targeting a strategic return on sales between 9% and 11% by 2030.

Oliver Blume, CEO of Volkswagen Group, emphasized the company’s commitment to implementation, speed, and performance, stating, “We have already made crucial decisions for our company’s structure over the past nine months. Our clear 10-Point-Program prioritizes our operational and strategic areas of action, with a core focus on products, markets, customers, technologies, and financial framework. Our management approach is centered on measurability, transparency, accountability, and team spirit. Ultimately, our customers, investors, and team members will benefit from this strategic realignment through attractive products, improved returns, and brand entrepreneurship.”

To facilitate financial targets, strategy, and brand identities, Volkswagen Group has granted the brands direct responsibility, supported by brand group-level performance programs. These programs will strengthen market positioning by enhancing margins, improving product mix, and incorporating advanced vehicle features. Brands will also explore new business models, including mobility services, to tap into additional profit opportunities. Realizing economies of scale and implementing cost-saving measures across development, materials, production, sales, and fixed costs will further support profitability objectives.

Arno Antlitz, CFO and COO of Volkswagen Group, explained the new “value over volume” approach, saying, “Our steering model prioritizes sustainable value creation over volume growth, with a focus on profitability, lower fixed costs, and disciplined investment. As the automotive industry undergoes an unprecedented transformation toward e-mobility and digitalization, we recognize the need for a new approach. By establishing brand groups and technological platforms, we aim to achieve a balanced combination of brand power and economies of scale, enabling sustainable, profitable value creation.”

Volkswagen Group will also enhance technology platforms to deliver an exceptional customer experience. Key areas of focus include platform architectures, batteries, software, and mobility services. These technological advancements will empower the brands to strengthen their market positions and drive sustainable profitability. Notably, the Group’s battery strategy and the ramp-up of PowerCo will provide flexibility and competitiveness through the Unified Cell concept, combining standardized geometry with tailored chemistries for various performance segments.

Regionally, Volkswagen Group is refining its strategies for China and North America. In China, the Group aims to maintain its position as the most successful international original equipment manufacturer (OEM) by prioritizing products developed in China for the Chinese market. In North America, the Group seeks to significantly expand its market share, including investments in new electric vehicles and a battery cell factory in Canada. The relaunch of the iconic Scout brand with all-electric vehicles manufactured in South Carolina will target the high-margin pickup and Rugged SUV segment.

The Capital Markets Day marks the beginning of an enhanced dialogue with the capital market for Volkswagen Group. Future events will provide investors and analysts with more detailed insights into the strategies of brand groups, technological areas, and regional plans.

Media and investor contacts:

Dr. Sebastian Rudolph
Volkswagen Group Communications Head of Global Group Communications
+49 (0) 5361 / 9-13125 sebastian.rudolph@volkswagen.de

Pietro Zollino
Volkswagen Group Communications Volkswagen Group | Deputy Head of Group Communications & Head of Corporate Communications
+49 (0) 172 8371431 pietro.zollino@volkswagen.de

Christopher Hauss
Corporate Communications Spokesperson Strategy & Finance Communications
+49 (0) 5361 9 984175 christopher.hauss@volkswagen.de

SOURCE: VOLKSWAGEN GROUP