Our strategy - For tomorrow’s growth.
Fundamental issues need visionary answers. In launching its future program TOGETHER – Strategy 2025, Volkswagen has kicked off the biggest process of change in its history. Its overarching vision is to become a world-leading provider of sustainable mobility. The path there will be dominated by harmonious coexistence and exchange as equals. For one reason: new times call for new forms of collaboration.
This page vividly illustrates in detail which elements shape the new Group strategy.
The New Group strategy is not the work of external consultants. It came straight from the heart of our company.
Our Vision - The Volkswagen Group of the future
This target dimension focuses on the diverse needs of our customers and on tailor-made mobility solutions. We aspire to exceed our customers’ expectations, generating maximum benefit for them. That calls not only for the best products, the most efficient solutions and the best service, but also for flawless quality and an outstanding image. We want to excite our existing customers, win over new ones and retain their loyalty in the long term – because only loyal and faithful customers will recommend us to others. The strategic KPIs include, for example, the loyalty rate, conquest rate and breakdowns.
Skilled and dedicated employees are one of the keys to sustainable success. We wish to promote their satisfaction and motivation by means of equal opportunities, a modern and attractive working environment, and a forward-looking work organization. An exemplary leadership and corporate culture forms the foundation for this, enabling us to retain our core workforce and attract new talent. The strategic KPIs of this target dimension include the Group’s attractiveness as an employer as determined internally by means of the opinion survey and as perceived externally, as well as the equality index.
Role for the environment, safety and integrity
Every day, we at the Volkswagen Group assume and exercise responsibility in relation to the environment, safety and society. This sense of responsibility informs all our thoughts and actions in equal measure in all the decisions we take. We pay particular attention to the use of resources and the emissions of our product portfolio as well as those of our locations and plants, with the goal of continuously reducing our carbon footprint and lowering pollutant emissions. Through our innovations and outstanding quality we offer our customers maximum product safety. We want to regain and strengthen the trust of our customers and restore the Group’s positive public image. The most important principles in this process include compliance with laws and regulations, the establishment of secure processes, and dealing openly with mistakes so that they can be avoided or rectified in the future. In terms of integrity, Volkswagen aims to become a role model for a modern, transparent and successful enterprise. The strategic KPIs of this target dimensions include the decarbonization index and emissions figures, as well as compliance, process reliability and a zero-defect culture.
Investors judge us by whether we are able to meet our obligations as regards interest payments and debt repayments. As equity holders, they expect adequate dividends and a lasting increase in the value of their shares. We make investments with a view to achieving profitable growth and strengthening our competitiveness, thus keeping the Volkswagen Group on a firm footing and ensuring it remains an attractive investment option. The goals we have set ourselves are operational excellence in all business processes and to become the benchmark for the entire industry. The strategic KPIs are operationalized for internal management purposes: target and actual data are derived from Volkswagen Group figures.
Cooperation - Exchange as equals.
The Volkswagen Group is sustained by the solidarity of its brands, by functioning networks of experts and by good relationships between people. The success of our Group stems from the advantage that each brand gains from this community.
The recipe for the success of our community is synergy. It is the basis of our economic success. It is our obligation to make effective use of all conceivable advantages associated with the Group.
We place the well-being of the brand community above the well-being of the individual brands. Our goal is the success of the whole. That is how we develop pioneering mobility concepts for future generations.
- The basis for our cooperation is mutual trust.
- We are GENUINE with one another.
- We work together in a STRAIGHTFORWARD and reliable way.
- We are OPEN-MINDED to each other.
- We work AS EQUALS.
- The right choice can only prevail over one dictated by power if rank, position and origin are not as important.
- We are connected in terms of business and friendship and we stand UNITED.
Strategies and Initiatives - Overview of key elements
We must increase efficiency considerably – across the entire value chain and all brands.
Group initiatives - Driver of change.
1 - Sharpen positioning of brands
Optimum coverage of markets, customer segments and customer budgets is the focus in the first Group initiative. This goal will be achieved by setting up needs-based, automobile-specific customer segments as well as through meaningful differentiation of the brand territories for serving global profit pools. The focus will initially be on Europe, where the Group is currently sharpening the positioning of its brands once more. The positioning of the Group’s brands in China will also be optimized during 2017 based on a detailed customer survey.
2 - Vehicle and drivetrain portfolio
The objective of the Group’s second initiative is to develop a future-oriented vehicle and drivetrain portfolio, taking the corporate objectives and carbon compliance targets into account. By 2020, the portfolio in the growing SUV segment will initially be expanded by adding more than 20 models, with simultaneous development of electrified models. Development activities up to 2025 will focus on more than 30 new electric vehicles. At the same time, Volkswagen intends to systematically consolidate its conventional portfolio for specific markets.
3 - Streamline modular architectures
The goal of the third initiative is to cut expenses in the architectures by 30% by 2025, simultaneously implementing comprehensive electrification as well as a focus on self-driving systems. The 30% target will be achieved by significantly reducing complexity in streamlined yet synergistic platforms without overlaps.
4 - Partnerships in the economy segment
The economy segment in particular is experiencing a boom worldwide in terms of mobility. The goal of the fourth Group initiative is for the Group to enter into an increasing number of local partnerships to develop and offer economy products that are in conformity with market requirements. Objectives include better adaptation to the needs of customers in different regions and establishing competitive cost structures. Negotiations for the first partnerships are already underway.
5 - Self-driving system and artificial intelligence
The aim of the fifth initiative is to bring highly automated driving functions to market as a core competency from 2021. This involves private vehicles, shared mobility systems and commercial mobility providers. Under the direction of Audi, a company is currently being founded that will develop a Group-wide self-driving system. Strategic partnerships are also being explored.
6 - Battery technology as a core competency
The battery accounts for 20-30% of material cost in electric vehicles and will become a key component for product differentiation. This is the reason for building up expertise as battery technology in as one of Volkswagen’s strategic objectives. By 2025 Volkswagen Group, together with strategic partners, aims to become a technology leader in automotive traction batteries. For this, the Group will pool its battery cell and battery module expertise in a center of excellence. Intelligent partnering models will accelerate the enhancement of expertise and technological change.
7 - Best-in-class user experience
The more digital and software-based components are used in vehicles, the more important it is for customers to be satisfied with these components. The objective of the Group’s seventh initiative is therefore to make Volkswagen one of the best companies worldwide from the perspective of user experience. The strategy centers on the development of a brand-specific design language for the user interfaces. Volkswagen is also focusing on developing universal design and development tools and on brand collaboration in the field of UX. The Group Future Centers in Potsdam, San Francisco and Beijing are the drivers of this strategy building block.
8 - Implement model line organization
The Volkswagen Group is implementing the model line organization in its four core brands: VW, Audi, SKODA and SEAT; Porsche already implemented this form of organization several years ago. In appointing a new series manager, the Group is increasing the responsibility for the success of the vehicle projects. This will enable Volkswagen to improve cross-divisional project work, accelerate decision-making and cement the focus on results in the projects. Last but not least, it will strengthen the entrepreneurial spirit in the Group throughout all of the organizational units involved.
9 - Realign “Components” business
Around 80,000 employees at 57 sites worldwide – components are an integral part of the Group and have a central role in the engine-gearbox core competency in particular. That this remains the case in the face of new technological developments such as electrification is the task of the ninth initiative. Its goal is to develop a highly competitive cross-brand business model for components. Developing new areas of business is also part of this initiative.
10 - Build mobility solutions business
Mobility services such as shuttle on demand and ride hailing services are growth markets and will become increasingly popular. The Group’s tenth initiative aims to ensure that the mobility company named MOIA that Volkswagen set up in 2016 becomes one of the leading providers of innovative transport services and scales profitable business models worldwide in the years to come. Strategic investments and partnerships are also planned for this.
11 - Develop and expand smart mobility offering
The objective of the eleventh initiative is to make Volkswagen one of the three largest providers of efficient, comfortable mobility services worldwide by 2025. Its portfolio will include mobility on demand and vehicle on demand services and will be implemented across all brands. A cross-brand decision-making committee for the Volkswagen Group called the Group Digital Services Committee has already been set up for this purpose. In addition, different mobility services have been prioritized with appropriate accountability in the brands.
12 - Improve operational excellence
Improving operational excellence in all of the Group’s divisions is the aim of the Group’s twelfth initiative. The efficiency of capex and research and development costs in particular is to be enhanced; there is also potential to trim selling expenses and general and administrative expenses. Overall, the measures are expected to lead to significant savings and higher profits as early as 2020.
13 - Optimize business portfolio
The goal of the thirteenth initiative is to make Volkswagen a competitive, financially sound mobility provider that focuses on its core business and uses its capital to the best advantage. For this, the Group’s business portfolio is being analyzed in detail and existing options are being examined. A standardized process for continuous evaluation of the Group’s business portfolio will also be developed.
14 - Drive digital transformation
At Volkswagen, the digital transformation is being driven forward by the fourteenth initiative, which covers digital customers, digital products and the digital enterprise. Under the new strategy, more than a dozen digitalization projects have already been pushed in the focus areas of user experience, design, products & services, smart mobility, customer & business, Business 4.0 and Industry 4.0.
15 - Create organization 4.0
In implementing the fifteenth initiative, the Volkswagen Group is creating a framework that takes a holistic approach to the different aspects of organizational development. A platform has been set up to connect activities across divisions, instigate new organizational approaches and anchor these in the Company in the long term. The aim of this initiative is to not only allow holistic stimulus for innovations, entrepreneurship and change, but also actively encourage this. In times of constant technological change, this will enable the Group to remain agile and competitive.
16 - Integrate strategy and planning process
In the sixteenth initiative, the planning round process is being integrated and adapted for the entire Volkswagen Group with the aim of closely dovetailing the Group and brand strategies with profit and financial planning. At the same time, improvements are being introduced in the planning process to reduce the planning effort and increase the quality of planning.
Functional areas - Ideas from the heart of the company
Volkswagen Group Procurement sources products and services for the Group that provide optimum customer value using the best possible cost structures. The Procurement functional area aspires to be the world’s most efficient and attractive organization of its kind. Specific aims include gaining access to supplier innovations, leveraging Group-wide synergies and ensuring a supply chain that excels in all dimensions. A key element of this strategy is the active role played in the early stage of the project – the only way to actively manage costs, achieve price leadership in new technologies and ensure market-driven concepts. Volkswagen Group Procurement’s strategy is based on very highly qualified and motivated employees as well as a state-of-the-art, future-oriented organizational structure.
Customer Delight is the driving goal for Group Sales. It is the Sales’ mission to aim at creating unique and strong positions for Volkswagen’s brands, conquering new markets and addressing a broad segment of various customers. Key cornerstones of the Strategy are: Excellent Sales Organization, Effective Brand Portfolio Management, Outstanding Sales Performance and a Sustainable Growth. The Sales and distribution of innovative mobility – for customers globally – secures profitability long term and enables sustainable growth.
K-F Finance and Controlling
Acting as the financial navigator for sustainable growth, the Finance and Controlling functional area intends to make a contribution to the Volkswagen Group of the future. To ensure competitive profitability, liquidity and financial stability for the Group, this area counts on a strong team as well as reliable compliance and an effective risk management system. These elements are accompanied by partnerships with stakeholders based on trust, loyalty and openness. Stakeholders in turn can bank on neutrality, reliable standards and a focus on targets that invariably considers what is best for the Group.
K-I Integrity and Legal Affairs
The trust our customers continue to place in us and the perception of Volkswagen as an excellent employer are crucial for the Group’s success. The strategic objective of the Integrity and Legal Affairs functional area is therefore to anchor these factors as the basis for daily activities in the Group, thereby making a vital contribution to Volkswagen’s sustainable growth. This specifically entails safeguarding customers and staff against compliance risks and positioning the functional area as a competence center for integrity and legal affairs, data protection, compliance and risk management.
K-GE Research and Development
Technological innovations play a pivotal role in the design of pioneering mobility solutions with inspiring products and services that define the brands. Staff in the Research and Development functional area are aware of this huge responsibility. To generate sustainable growth while serving as an example in relation to the environment, safety, integrity and resource efficiency at the same time, Volkswagen relies here on an exceedingly efficient cross-brand development alliance. Characteristic features of this alliance are close networking among experts, collaborative working relationships on equal terms, an innovative working environment and selective pooling of development activities to leverage synergies and efficiencies throughout the Group.
Intelligent networking of people, brands and machines in global manufacturing and logistics is the vision of the Production functional area. Intelligently networked means that the strengths and potential of Group-wide production are combined and the resulting synergies are leveraged to make Volkswagen competitive and fit for the future. The strategic objective is to organize production as sustainably and productively as possible. This will be achieved through future-proof work structures, greater efficiency, intelligent processes and a versatile production network that anticipates future developments in the markets as well as in relation to competition, products, environmental issues and innovation. The strong alliance in the Volkswagen Group and the open, cross-brand exchange of ideas and information between all parties involved in the production process provides the basis for this continuous development.
K-GQ Quality Assurance
Delivering outstanding quality and reliable mobility to customers worldwide is the strategic objective of the Quality Assurance department. As the “voice of the customer” the principle of dual control is relied on in critical company processes; products that are superior to those of the competition are developed within budget requirements. The department’s commitment to quality runs the gamut of current and future mobility solutions – vehicles as well as services. Last but not least, all markets will pay close attention to differing regional needs to make a substantial contribution to the Volkswagen Group’s sustainable growth.
K-S Human Resources and Organization
Positioning the Volkswagen Group as an excellent employer of the future is the strategic objective of the Human Resources and Organization functional area. Expert, enterprising staff form the basis for Volkswagen’s success, both today and tomorrow. To give all employees optimum conditions for delivering supreme performance, the human resources activities support individual development paths, diverse training opportunities and the organization of modern working environments. Increasing diversity, integrity, appreciation and respect is a key objective of the Volkswagen Group’s human resources strategy. The unifying framework for implementing this strategy is provided by an exemplary leadership and corporate culture that is shaped by team spirit and ingenuity.
Best-in-class IT solutions, enthusiastic users, progressive data protection and, not least, an extremely attractive working environment are the strategic objectives of the IT functional area in the Volkswagen Group. Mobility will be turned into an exciting experience at a digital level as well. The IT department also aims to add value in the future, thereby contributing to the Group’s sustainable growth. Through open, straightforward partnerships, the Group’s global IT expertise will be harnessed to advance innovation and ensure reliability. Effective protection of digital information has top priority at all levels.
Brands and regions - For innovation, sustainability and profitability.
The TRANSFORM 2025+ strategy is the program approved by the Board of Management and Supervisory Board to get the Volkswagen Passenger Cars brand back on the road to success. The path to this goal has three stages, with intermediary milestones in 2020 and 2025. The strong vision entitled “moving people forward” is supplemented by a mission that sums up the strategic goals as follows: “We will bring the future into production – as the world market leader for electric mobility. We will advance society and our customers’ business – with ingenuity and passion. We will bring our strengths to the job – to shape our transformation together.”
“Vorsprung is our promise. We inspire through individual, sustainable premium mobility. Our premium vehicles are the foundation.” – This is Audi’s strategic vision, addressing the megatrends of digitalization, sustainability and urbanization.
Audi is systematically digitalizing its processes and creating a platform for integrated, connected mobility and digital services. As a fundamental element of the strategy, sustainability extends beyond the product. For this purpose Audi is accelerating the development of innovative drivetrain technologies and is following the principles of a sustainable circular economy. Through cooperations with cities, the access to individual, city-friendly premium mobility will be enabled, whereby the vehicle becomes part of an urban solution. Audi Corporate Strategy
The mission of SEAT’s new strategy: “We deliver easy mobility solutions created in Barcelona to empower people to live a better life.” SEAT is the car brand with the youngest customers in Europe and – with the biggest product offensive in its history and a massive investment in environmentally friendly drivetrain technologies – aims to conquer even more customer segments. In particular, SEAT wants to be more attractive and trustworthy to new car buyers aged around 40 to 45. The SEAT strategy 20/25 aims to increase pricing power, to improve structural cost and to launch the first electrified products.
Some milestones: improved structural cost competitiveness; 5% segment shares in all key markets; increasing profitability for the dealer network; launch of the first electrified SEAT; offering digital solutions for urban mobility and growing markets outside Europe.
Shaping the future of the sports car – this is the theme of Porsche’s Strategy 2025. The sports car of the future will blend the history and values of the Porsche brand with innovative technologies, while at the same time ensuring sustainability. In achieving this, topics such as e-mobility, digitalization and connectivity will play an important role. Embracing these topics will allow Porsche to shape the exclusive and sporty mobility of tomorrow. The company’s main objective is to achieve value-generating growth. Only by achieving such growth can it make sustainable investments in innovative technologies, new products and its workforce. Porsche wants to excite customers and is also aiming to consolidate its reputation as an excellent employer and business partner that fulfills its social and environmental responsibilities. And the return needs to be sufficient too. Porsche Corporate Strategy
Clever ideas for individual mobility have advanced the Škoda brand for over 120 years. Škoda’s task now is to use this expertise to create the best mobility solutions for the future. The brand strategy builds on an outstanding team that aims to inspire existing and future customers alike – families, enterprises, commuters or simply people who enjoy mobility to the full – with pioneering, sustainable products and services.
The strategy of Volkswagen Commercial Vehicles is focused on the vision of providing “world-leading transport solutions to our customers”. These are designed to increase customers’ economic success, which particularly in the commercial sector is the most important reason for a purchase decision alongside quality and reliability. The Group’s goal is to become the leading provider of low-emission and zero-emission light commercial vehicles and to offer integrated transport solutions. Here, autonomous transport solutions are increasingly the focus of interest. Highly competent, dedicated employees are likewise crucial: through talent and skills management Volkswagen Commercial Vehicles seizes opportunities for the future and positions itself as an excellent employer. Synergies created through modular vehicle architecture and operational excellence ensure competitive profitability and provide the scope for further investments in the future.
Volkswagen Truck & Bus
Establishing the world’s leading truck and bus business as a “Global Champion” and inspiring customers as an innovation leader is the aim of Volkswagen Truck & Bus with its SCANIA, MAN, Volkswagen Caminhões e Õnibus and RIO brands. New goals, new paradigms – this is how the optimum for the Group will prevail in thinking. In technological terms, the cross-brand work on shared platforms will create synergies for the core components of the drivetrain. At a cultural level, trust, responsibility and respect for traditions will coalesce with a mentality focused on expansion.
Volkswagen Financial Services
To be the key to greater mobility is the vision of ROUTE 2025, the strategy of Volkswagen Financial Services. In this endeavor, the Group fulfills key functions for different stakeholders – as a reliable partner for the dealers but also for customers, for whom Volkswagen Financial Services makes individual mobility possible with attractive products. Dedicated employees live the corporate values, distinguish themselves through operational excellence and thus lay the foundations for profitable growth in the Volkswagen Group.
Volkswagen Group China
Volkswagen Group China has been active in the People’s Republic of China for nearly 40 years, during which time it has established itself as the largest vehicle manufacturer in this key global market. The strategic objective is clearly defined: together with its partners, the company aims to become the leading provider of sustainable mobility in China.
- Annual Press Conference 2017, Charts Matthias Müller. Volkswagen prepares for tomorrow: Read here how the company’s strong operating business lays the foundation to shaping the mobility of the future.
- Shaping the future of the Volkswagen Group. With “TOGETHER – Strategy 2025” we are building a new, a better, and an even stronger Volkswagen. We want to thrill our customers with fascinating vehicles and innovative mobility solutions, to be a technology leader and role model when it comes to the environment, safety and integrity. We will represent an attractive investment by achievingcompetitive profitability, and we will remain an excellent, reliable and secure employer.