ForMotionplus
SOUND ECONOMIC FOUNDATION
Companies today are faced with a host of demands from the markets, their shareholders and stakeholders. Customers expect outstanding products, shareholders want dividends and share price increases, employees require secure and attractive workplaces, and suppliers demand appropriate prices for their services – to name just the most pressing examples.
A company can only meet all of these expectations if it is based on a sound economic foundation. This foundation will only remain firm if a premium is generated over the long term above and beyond the cost of capital. Only then do companies have the necessary financial flexibility to invest in products, quality and technologies that will keep them competitive going forward.
That is why every successful company regularly examines its products and processes. This has been the case at Volkswagen for decades now, most recently as part of our successful ForMotion program and its follow-up, ForMotionplus. The two programs share the same goal: to enhance performance at all the Group’s brands and companies.
A CLEAR TARGET
The philosophy we apply to our cars also applies to ForMotionplus: the successor must be better than its predecessor. ForMotion set a positive earnings trend in motion. For ForMotionplus, we raised the bar even higher: in 2008, we want consolidated profit of at least €5.1 billion before taxes. And then we want to achieve our cost of capital in the Automotive Division. We are aiming for an ROI of at least 9% over the medium term in that area.
The individual brands and companies are responsible for reaching these targets. Each of them has defined its own program, on which concrete projects are based. This is what sets ForMotionplus apart from its predecessor, which outlined seven central focus areas. However, complementary to the brand and company projects, ForMotionplus has also set four overarching focus areas, which are steered at the Group level: “improved sales performance”, “material costs”, “processes” and “capital employed”. Improving cooperation between dealerships and the Financial Services Division is one concrete example for a project in the “improved sales performance” focus area.
The ForMotionplus earnings target of at least €5.1 billion in profit is a net figure. Negative market or economic influences must be compensated. The success of all projects is critically dependent on each employee doing their part for ForMotionplus. We therefore incorporate them into the program’s objectives and keep them informed on current progress via Volkswagen’s intranet, employee magazines and events. The Board of Management follows the program closely and regularly informs the entire management of upcoming milestones and challenges in the “ForMotion Dialog”.