Volkswagen Group is undergoing a strategic alignment to strengthen its profitability and cash flow. During its Capital Markets Day, the Group introduced leadership principles that emphasize customer orientation, entrepreneurship, and team spirit. The Group has assigned the responsibility for achieving return targets to each of its brands. For the first time, each brand will launch its own performance program with a focus on strengthening profitability, cash flows, and reducing capital intensity. This marks a shift from pure volume growth to prioritizing sustainable value creation based on the “value over volume” principle. The Group is also realigning its architecture, battery, software, and mobility services to fully leverage economies of scale. Regionally, Volkswagen is focusing its investments on the most lucrative profit pools globally, refining strategies for growth markets like China and North America. With a brand-focused approach and performance programs, the Group aims to achieve a strategic return on sales target of 9 to 11 percent by 2030.
“Our focus is on implementation, speed, and performance,” says Oliver Blume, CEO of Volkswagen Group. He further emphasizes the importance of clear priorities, operational and strategic focus, and the benefits this realignment brings to customers, investors, and the team.
The new steering model introduces direct responsibility for financial targets, strategy, and brand identities to the brands. The performance programs, managed at the brand group level, provide a framework for further development. By shifting the focus from volume to value creation, the brands aim to strengthen market positioning and improve performance in terms of margins, product mix, and vehicle features. Additionally, the brands will explore new business models such as mobility services to tap into additional profit opportunities. To support this, the Group will optimize economies of scale and implement cost-saving measures in various areas.
Volkswagen Group has adopted a new approach that prioritizes sustainable value creation over volume growth. Arno Antlitz, CFO and COO of Volkswagen Group, explains that the steering model focuses on profitability, lower fixed costs, and disciplined investment. The aim is to strike a balance between brand emotional power and scale benefits provided by technology and services offered by the Group.
The realignment also includes an explicit designation of the brand groups, which will be named Core, Progressive, Sport Luxury, and Trucks. This move aims to reinforce the Group’s commitment to technology platforms that provide an exceptional customer experience. The platforms cover architecture, battery, software, and mobility services allowing the brands to leverage scale benefits and increase profitability. In terms of technology, Volkswagen Group plans to establish the group-wide platform SSP by 2024, alongside competitive architectures such as PPE and the second-generation MEB+. The battery strategy and ramp-up of PowerCo will enhance flexibility and competitiveness through the Unified Cell concept.
CARIAD, the Group’s internal software supplier, will support the launch of new electric vehicles like the Porsche Macan and Audi Q6 e-tron. The next-generation E³ 2.0 will be developed in collaboration with CARIAD, VW, and Audi in a Software-Defined-Vehicle hub, reinforcing Volkswagen Group’s commitment to digitalization and e-mobility.
Volkswagen Group aims to strengthen its financial robustness and has set specific key performance indicators (KPIs) for each brand group, as well as the CARIAD and PowerCo technology platforms. The KPIs focus on operating results, return on sales, net cash flow, cash conversion rate (CCR), and investment ratio. The Group plans to develop its management incentive scheme further to include selected financial targets for brand and brand group performance. The Group’s sales growth target is set at 5 to 7 percent annually until 2027 and will be aligned with industry developments thereafter. The strategic return on sales target is expected to reach between 9 and 11 percent by 2030.
Volkswagen Group is also refining its regional strategies, particularly in China and North America. In China, the Group aims to maintain its position as the most successful international OEM by developing products tailored to the Chinese market. In North America, Volkswagen Group plans to expand its market share by investing in new electric vehicles and establishing a battery cell factory in Canada. Additionally, the relaunch of the Scout brand will focus on all-electric vehicles in the high-margin pickup and Rugged SUV segment.
The Capital Markets Day serves as the kick-off for a closer engagement with the capital market. Volkswagen Group plans to host further events to provide investors and analysts with more detailed information about brand group strategies, technology areas, and regional approaches.