Volkswagen Group Launches the 2025 Strategy Release

A few days ago, Volkswagen Group issued the "Joint Progress - 2025 Strategy", which is the biggest change in the history of the Volkswagen Group. Volkswagen Group intends to become a world leader in sustainable mobile travel solutions by providing success in the future of mobile travel. Driven by this goal, the management board of the Volkswagen Group issued the "2025 Strategy" approved by the board of supervisors. Focusing on the "2025 Strategy," Volkswagen will comprehensively adjust its core automotive business, rapidly establish new mobile travel solutions, increase its effectiveness, strengthen its innovation capabilities, and implement corporate concepts and methods to achieve the Group's development goals. .

When Matthias Müller, CEO of Volkswagen Group, announced the new strategy of the group in Wolfsburg, “The Volkswagen Group has made millions of people in the world enjoy a higher quality of life with its brands and products. We will Continuing the successes of the past and striving to lead the development of future mobile travel modes, diesel engine emissions have caused a serious impact on the Group, and we will learn from the mistakes, correct deficiencies, and establish a foundation based on honesty and integrity. Value-oriented open corporate culture."

"'Join together - the 2025 Strategy' will help the Volkswagen Group to be more focused, efficient, innovative, customer oriented, adhere to sustainable development, systematically expand its business and achieve profitable growth. Our goal is to provide Stakeholders create lasting value. For this purpose, Volkswagen Group will work hand-in-hand with employees, customers, shareholders and partners, and shoulder the responsibility of society and the environment.” Muren further pointed out.

Core business adjustment

In the new strategic framework announced by the public recently, the focus is on the adjustment of the core automotive business. In other words, Volkswagen will make fundamental adjustments to address the new era of mobile travel. To this end, Volkswagen will also further clarify the positioning of the Group's brands, optimize the product portfolio of automobiles and powertrains, and focus on the most attractive and fastest-growing market segments. In addition, Volkswagen Group will pay more attention to the needs of regional markets and customers, through the existing product lineup of approximately 340 models, systematically promote the Group's profit growth.

In the field of automobiles and powertrains, Volkswagen will also focus on the research and development of electric vehicles. It is understood that Volkswagen is developing an extensive plan: In the next decade, more than 30 models of pure electric vehicles (BEV) will be introduced. It is estimated that electric vehicles will occupy a quarter of the global passenger car market. In 2025, Volkswagen Group expects its pure electric vehicle sales will be between 2 million and 3 million, accounting for 20% to 25% of the total sales.

On the basis of achieving profitable growth, the public is reviewing and optimizing the modular architecture, simplifying the complex processes of R&D and production, and improving efficiency, so as to better utilize the economic value of the group system.

Volkswagen will continue to implement regional development strategies, especially in the attractive automotive market. It is reported that Volkswagen is implementing expansion and investment plans in North America and continues to increase its pace of expansion in China.

Create new core competitiveness

In order to better cope with future areas related to driverless and artificial intelligence, Volkswagen will increase investment in R&D, and intends to complete the independent research and development of a competitive SDS within 10 years and obtain a permit.

It is expected that the sales volume and market capacity of electric vehicles will grow rapidly in the next few years. The public will also regard battery technology as another new competitiveness. It is understood that Volkswagen will study the relevant potential sources of income in the field and the strategic decisions for research and development activities.

Corporate philosophy and implementation

In addition to the integration of the various brand product lines, Volkswagen will also make adjustments to the components business, which covers 67,000 employees in 26 locations around the world. It is understood that the adjustment measures mainly include the systematic integration and strategic restructuring of various brands under the group.

Volkswagen will closely follow the future direction of the automotive industry in the fields of passenger cars and commercial vehicles. The commercial vehicle cluster consisting of three major brands Scania, Mann and Volkswagen Commercial Vehicles, the Group is committed to making it a leader in the field of commercial vehicles, and its determination is unwavering. Volkswagen Truck & Bus GmbH, Volkswagen Truck & Bus GmbH, is also confident that its brands will perform well in key regions of the world and become the most profitable company.

In order to achieve these goals, Volkswagen will deepen the cooperation between its various commercial vehicle brands, improve the overall performance of the Group, and further expand the global distribution. In addition, the new business model will also play a decisive role. The Group’s mid-term goal is to transform from a single commercial vehicle manufacturer to an intelligent transportation solution provider.

Taking mobile travel service as another development driving force

In addition to the adjustment of its core business, the establishment of cross-brand mobile travel solutions business is another important part of the “2025 Strategy”. It is understood that Volkswagen will start with on-street services (ie, on-demand travel services) and use the on-street service as the core to carry out services such as driverless taxi, car sharing, and on-demand transportation. At the end of May this year, Volkswagen Group has established a strategic partnership with on-demand travel service provider Gett, taking the first step in this area.

In the rapidly expanding travel service market, the Volkswagen Group has set a goal for the newly established mobile travel solutions business and will generate billions of euros in revenue by 2025.

At the same time, Volkswagen will also promote the digitization process for all regions and brands, and centralize management of investment decisions in order to bring maximum added value to the group and its brands.

Significantly increase efficiency

Overall, based on the 2025 strategic framework, the Group’s projected investment in forward-looking projects will amount to tens of billions of euros. All departments and functional blocks of the Group will significantly increase the level of operation and management to ensure that funds are in place. Especially for the Volkswagen brand, the Group will vigorously stimulate its potential for efficiency based on industry standards. This initiative will run through the Group's entire automotive business value chain, including product development, procurement, production and distribution.

Specifically, as of 2025, VW expects to achieve a ratio of 6.0% of capital expenditures and sales revenue for the automotive business. At the same time, the company will also significantly increase the utilization rate of research and development expenses, and the R&D cost and sales revenue ratio will be reduced to 6.0%.

It is also understood that Volkswagen will also introduce more funds for future investment projects by optimizing its existing brand portfolio and equity investment.

Group financial target adjustment

It is understood that the adjusted financial goals will provide strong support for the "2025 Strategy." “In order to achieve systematic expansion of business and achieve profitable growth, the improvement of profitability will be one of the Group's key strategies. In the coming years, based on a stable financial position, Volkswagen will spare no effort to continuously create value for shareholders. "CFO Frank Witter explained.

In 2015, Volkswagen’s sales margin (excluding special items) was 6.0%. By 2025, Volkswagen will strive to achieve a sales profit margin of 7% to 8%, and the automotive business plan will achieve a return on capital of more than 15%. In addition, the proportion of shareholder dividends will be maintained at about 30% of net profit.

“The future Volkswagen Group will use its superior products, customized financial services, and smart mobile travel solutions to better motivate customers. We will become a technology leader and industry model focusing on environmental protection, safety and integrity. Competitive profitability is also the most reliable company and employer while maintaining the attractiveness of investment. The Volkswagen Group will be a company that we feel proud of,” Murren said.