VW Specialist London Blog

Volkswagen made good progress in its transformation into a tech company in the first year of its ACCELERATE strategy. Important milestones were achieved in 2021 with respect to the key elements of e-mobility, digitalization and new business models. At the same time, the company gave a sustained boost to efficiency in a challenging competitive environment: There was an appreciable increase in sales revenue, return and operating profit in the last fiscal year despite significantly lower unit sales.

“2021 was an extraordinary year. In an extremely demanding environment, we not only stayed on course in operating terms, but also gave our efficiency a sustained boost. Today, we are much more profitable, more crisis-resistant and more effective that we were just a year ago. At the same time, we have once more stepped up the pace of our transformation into a tech company with the ACCELERATE strategy”, Ralf Brandstätter, CEO of Volkswagen Passenger Cars, said. “In 2022, we will continue to forge ahead with our transformation and with strengthening our resilience. However, it is not possible at the present time to predict the course of the war in Ukraine and, more particularly, the impact on supply chains and the global economy as a whole. But we laid a robust basis in 2021 to master this crisis, too.”

Optimized cost structure, strict expenditure discipline, good product mix

At 4.9 million units, vehicle deliveries in a difficult competitive environment in 2021 were 8 percent lower than the previous year (2020: 5.3 million). Nevertheless, sales revenue grew 7 percent to EUR 76.1 billion (2020: EUR 71.1 billion). Operating profit before special items also grew significantly, increasing by EUR 2 billion to EUR 2.5 billion (2020: EUR 0.5 billion). The operating return on sales before special items in 2021 was 3.3 percent (2020: 0.6%), within the target corridor of 3 to 4 percent.

As a result of a restrictive expenditure policy, the overhead target was more than met in 2021. Fixed costs were over EUR 1 billion below the figure for the pre-crisis year of 2019. At the same time, Volkswagen continued to invest in the big topics of the future: Approximately every second euro invested or spent on research and development was earmarked for e-mobility. The company will be investing EUR 18 billion in e-mobility, hybridization and digitalization up to 2026.

North and South America regions return to sustained profitability

“We have consistently pursued the transformation of Volkswagen through focused investments in future projects, optimized overhead structures, and achieved a clear improvement in earnings quality through attractive products and a good product mix. Together with the turnaround in the regions we further strengthened the resilience of Volkswagen in 2021”, Volkswagen CFO Alexander Seitz commented.

In 2021, sales revenue and result in the two regions of North and South America were significantly above the level of the previous year, and the regions returned to profitability for the first time in several years. “In North and South America, we have consistently aligned the product portfolio to local market requirements, lowered fixed costs and adjusted local production. The regions have now achieved sustained profitability and have a strong plan for the future to further improve their competitiveness in the coming years”, Ralf Brandstätter said.

Important milestones in e-mobility and digitalization

With the ACCELERATE strategy launched last year, Volkswagen is not only strengthening its competitiveness, but also accelerating the ramp up for e-mobility and digitalization.

In the 2021 fiscal year, the company delivered more electric vehicles worldwide than ever before: In total, more than 369,000 electric vehicles (+73 %) – of which some 106,000 were PHEVs (+33 %) and 263,000 were all-electric vehicles (+97 %) – were delivered to customers. Volkswagen therefore doubled BEV deliveries compared with the previous year. Three new electric models were launched in 2021: The ID.4 and the ID.5 – both featuring a top-of-the-range GTX model – and the ID.6 in China. 2022 already saw the debut of the ID. Buzz a few weeks ago. Advance sales start in May, delivery of the first models is scheduled for the fall.

Production capacities are being systematically expanded in response to fast-growing demand. Following the conversion of the Zwickau plant into a dedicated electric vehicle production facility, three further plants – in Emden, Hanover and Chattanooga (USA) – begin building electric vehicles in 2022.

The company also reached important milestones in digitalization: In 2021, Volkswagen became the first volume car manufacturer to offer over-the-air (OTA) updates. More than 100,000 software updates have already been installed in customers’ vehicles in Europe. OTA will also be launched in the major markets of the USA and China before the end of this year. The company is thus laying the international groundwork for new business models such as on-demand functions – additional services that customers can book.

Volkswagen is improving the customer experience with the new ID. 3.1 software for all vehicles in the ID. family. The new software generation will debut in the ID.5 and the ID. Buzz and will be made available successively to all ID. customers. It shortens charging times, enhances comfort and optimizes operation.

Wolfsburg becomes development trailblazer – and gathers even more speed

Under ACCELERATE, Volkswagen is also driving ahead with the transformation of the main plant in Wolfsburg. The plant will begin building the first all-electric model, the ID.3, in 2023. Production of a second electric model, the Trinity, will commence in 2026. This model has a much shorter charging time and a range of over 700 kilometers. It is equipped with the Group’s state-of-the-art software and is technically ready for automatically driving, Level 4. The foundation is the Group’s new SSP platform that will be developed by Volkswagen in Wolfsburg.

Volkswagen plans to invest some EUR 2 billion in a dedicated production facility built close to the main plant. Moreover, an additional EUR 800 million is to be spent on a new development center at the site. Called Campus Sandkamp, this is where the new SSP electric platform and Trinity will be developed with a view to significantly accelerating development and production and setting new benchmarks. Going forward, the goal is to cut development time by 25 percent, with vehicle projects being completed in 40 months rather than 54 months as in the past.

Outlook for 2022: Higher sales revenue, earnings and electric vehicle deliveries

Volkswagen plans to significantly increase deliveries of all-electric vehicles in the current fiscal year. This will be helped by the improved availability of semiconductors expected for the second half of 2022 at the latest. Furthermore, Volkswagen expects to see an increase in the operating profit, sales revenue and the return on sales. “We confirm our goal of a 6 percent return on sales in 2023. We will set the next milestones for achieving that goal in 2022”, Volkswagen CFO Alexander Seitz said.

However, this guidance is subject to the further development of the war in Ukraine and in particular the impact on the Group’s supply chains and the global economy as a whole. At the time of preparing this outlook, there is a risk that the latest developments in the war in Ukraine will have a negative impact on the business of Volkswagen Passenger Cars.

Article source: www.volkswagen-newsroom.com

The Volkswagen Group has received the news about the war in Ukraine with great dismay and shock. Volkswagen continues to hope for a cessation of hostilities and a return to diplomacy. We are convinced that a sustainable solution to the conflict can only be found on the basis of international law.

Against the background of the Russian attack on Ukraine and the resulting consequences, the Group Board of Management of Volkswagen AG has decided to stop the production of vehicles in Russia until further notice. This decision applies to the Russian production sites in Kaluga and Nizhny Novgorod.

Vehicle exports to Russia will also be stopped with immediate effect.

With the extensive interruption of business activities in Russia, the Executive Board is reviewing the consequences from the overall situation, during this period of great uncertainty and upheaval.

Article source: www.volkswagen-newsroom.com

Volkswagen AG today announced that it will conduct an assessment on the feasibility of a potential initial public offering of Dr. Ing. h.c. F. Porsche AG. The Management Board and the Supervisory Board of Volkswagen concluded a framework agreement reflecting the respective discussions between Volkswagen AG and Porsche Automobil Holding SE and providing a basis for the next steps to prepare a potential listing. The Group’s Board of Management believes that a possible IPO of Porsche would be an important next step in the successfully launched transformation of Volkswagen into a vertically integrated mobility group and leading provider of software-based and emission-free mobility. The actual feasibility of an IPO depends on several different parameters as well as general market conditions. No final decisions have been made.

„The automotive industry is changing fundamentally. Volkswagen is determined to play a leading role in a world of zero-emission and autonomous mobility. We have set the right course with our NEW AUTO strategy and thanks to our substantial cash flows will invest with clear focus to enter new profit pools such as battery & charging, autonomous driving and our own mobility platform in the next few years. An IPO of Porsche AG would give us additional flexibility to further accelerate the transformation. Porsche AG would gain more entrepreneurial freedom and at the same time continue to benefit from group synergies,” said Herbert Diess, CEO of Volkswagen AG.

Jörg Hofmann, Deputy Chairman of the Supervisory Board of Volkswagen AG, said:

"Volkswagen is tackling the decisive years of transformation with clear focus and vigor. This also includes seizing the potential that a changed structure of the Group could offer. That is precisely what we have agreed on. The premise of all considerations is that Volkswagen's innovative power must be strengthened in order to expand its competitive edge in the vital issues of the future. All stakeholders will benefit from this – including the employees, of course."

VW would hold a majority stake in Porsche AG – Placement of up to 25% of preference shares

In the event of an initial public offering, the capital stock of Dr. Ing. h.c. F. Porsche AG is envisaged to be divided into 50% preference shares and 50% ordinary shares and up to 25% of the preference shares are to be placed on the market as part of a possible initial public offering. Porsche Automobil Holding SE would acquire 25% plus one share of the ordinary shares in Porsche AG from Volkswagen AG at the placement price of the preference shares plus a premium of 7.5%. It is not intended to list the ordinary shares on the stock market. Volkswagen AG would continue to hold a majority stake and include Porsche AG in its financial statements by way of full consolidation. The industrial cooperation between Volkswagen AG and Porsche AG would continue after an IPO.

Employees and shareholders would benefit from a possible listing

Volkswagen AG would be able to use the proceeds from a potential IPO of Porsche AG to accelerate the industrial and technological transformation of the Volkswagen Group. This includes investments in transforming its global production capacities to electric vehicles and funding of additional growth alongside its value drivers. In addition, in the event of a successful IPO, Volkswagen AG would propose to shareholders to distribute a special dividend amounting to 49% of the total gross proceeds from the placement of the preferred shares and the sale of the ordinary shares.

QIA has been a valuable and trusted partner as well as a major shareholder of Volkswagen AG for many years. Volkswagen AG thus welcomes QIA’s intention to also become a strategic investor in Porsche AG’s preferred shares as a natural expansion of the existing relationship.

Stephan Weil, Minister President of the State of Lower Saxony, which is also a major shareholder in Volkswagen, said: "The planned IPO of Porsche offers considerable opportunities for the further development of the VW Group as a whole and, above all, its Lower Saxony sites. That is why the state agrees with the presented framework agreement and will accompany the further process constructively."

Employees of Volkswagen AG and of VW Sachsen GmbH would also benefit from a potential IPO. According to the current state of discussions, around 130,000 employees would receive a one-time payment of 2,000 Euros each through an employee participation.

"The employee representatives on the Supervisory Board support the feasibility assessment. From our point of view, reorganizations can take place if the prospects for the employees are right, and the future is being shaped sustainably in the interests of the workforce. One thing is always clear to us: The competitiveness of our sites must be a priority in order to safeguard jobs in the Group. With the agreed guard rails, this would also be the case this time. It goes without saying that we will continue to closely monitor the proceedings and help shape the process." said Daniela Cavallo, Chairwoman of the General and Group Works Council.

The State of Lower Saxony has been benefiting from the Group’s investments into the transformation and will continue to do so, including at Volkswagen’s main site in Wolfsburg and its other sites. As part of the Group’s planning round 70, Volkswagen has decided to invest around 21 billion Euros in the vehicle and component plants in Lower Saxony over the next five years. This includes the Volkswagen brand’s project Trinity, a state-of-the-art electric car, which will provide autonomous driving to the masses, as well as the most modern development center in Germany.

Article source: www.volkswagen-newsroom.com

As of today, the new T-Roc and the new T-Roc Cabriolet are in the showrooms at Volkswagen dealerships in Germany. Featuring fresh design accentuations on the exterior, significant advances in the areas of operation and connectivity and the very latest generation of assistance systems, the two crossover models build on the success of the previous generation. The interior of the two models also offers a more contemporary style and greater sense of quality than ever before. The standard equipment now includes LED headlights, the Digital Cockpit, an 6.5-inch infotainment display and a redesigned multifunction steering wheel. Assist system highlights include IQ.DRIVE Travel Assist and Predictive ACC. The starting price for the new T-Roc with 1.0 TSI engine is 23,495 euros. The T-Roc Cabriolet is available from 31,850 euros.

Interested customers can now view the benefits of the new models for themselves at the Volkswagen showrooms: these include the enhanced exterior design, which is now even more striking thanks to new body finishes. The redesigned interior is discreetly refined in style, with everything perfectly in view. Central elements include the multifunction steering wheel, the standard Digital Cockpit (with fully digital display and operating system) and the redesigned infotainment displays, which – depending on equipment – are 6.5 inches to 9.2 inches in size.

The two new models offer numerous advanced assist systems – whether as standard or as optional extras – that were previously only available in higher vehicle classes. The range of standard equipment still includes Front Assist and Lane Assist, while the optional IQ.DRIVE Travel Assist is new to the range, as is the predictive cruise control system Predictive ACC, enabling assisted driving up to 210 km/h within the limits of the system. The range of functions offered by Side Assist has been extended, as has that of Park Assist, which now also takes care of parking forwards in perpendicular parking bays and moving out of parallel parking spaces.

Another highlight among the optional equipment is the IQ.LIGHT – LED matrix headlights. Whether you’re out and about during the day, at night or in bad weather, they always ensure the best possible visibility. While Dynamic Light Assist helps predictively illuminate winding roads within the limits of the system and ensures that oncoming traffic is not dazzled even when the main beam headlights are active, the individual LED segments of the high-tech light system provide better light distribution by specific activation and deactivation depending on the driving situation.

Optimum connectivity. The T-Roc has the latest generation of online services on board thanks to the Modular Infotainment Toolkit (MIB). The We Connect Plus functions enable the use of innovative digital services such as natural online voice control and access to streaming services. Apple CarPlay™ and Android Auto™ functions can also be integrated wirelessly into the control system via App Connect Wireless, if desired.

Five engines for the launch. Three petrol and two diesel engines with an output ranging from 81 kW (110 PS) to 140 kW (190 PS) are available for the new T-Roc. Depending on the drive, they are combined with either a 6-speed manual transmission or a 7-speed dual-clutch transmission (DSG).4MOTION all-wheel drive is available in conjunction with the 110 kW (150 PS) diesel engine and comes as standard in the 2.0-litre TSI with 140 kW (190 PS) for particularly supreme power transmission.

Close the door, open the roof! Highlights of the new T-Roc Cabriolet

When the first rays of sunshine appear in spring, you can enjoy relaxed driving in the T-Roc Cabriolet and feel the wind in your face. It offers space for four people, a luggage compartment volume of 284 litres and a soft top that opens fully automatically in 9 seconds and closes in 11 seconds, thanks to a electrohydraulic drive. Two petrol engines with turbocharging and direct injection are available for the open-top variant, the 1.0 TSI 81 kW (110 PS) and the 1.5 TSI 110 kW (150 PS), guaranteeing efficient driving pleasure for a relaxed cruising experience. And if anything does go wrong, there is a protection system that springs out in a fraction of a second to protect occupants in a worst-case scenario.

Article source: www.volkswagen-newsroom.com

The success story of the e-up! can resume. The all-electric small car can now be ordered once again. For many customers, Volkswagen's successful model served as their entry into e-mobility – not least of all because the city specialist offers extensive standard equipment, space for four people and an impressive range. To date, over 80,000 of this model of vehicle have been sold around the world, and in Germany it was in second place in 2021 for all-electric vehicles with the most new registrations.

The vehicle had turned into an absolute bestseller in recent years, causing delivery times to rise to up to 16 months. For this reason, Volkswagen temporarily stopped taking new orders for the mini vehicle at the end of 2020. Production continued throughout 2021 to process the order backlog. With 30,800 deliveries, this took the e-up! to second place among Germany’s most popular electric vehicles across brands last year. Now that the order backlog has been processed successfully, the model from the segment below the ID.3 is available to order again in Germany and will gradually be rolled out in other European markets.

Available to order now, the e-up! Style Plus features electric drive power of 61 kW/83 PS. The maximum WLTP range is up to 258 kilometers. In addition to its dynamic driving performance – thanks to features such as its high torque of 210 Nm – the e-up! boasts low consumption of 12.7 kWh (combined) per 100 kilometers. Among other standard features, the model comes with a CCS charging plug for rapid charging, the Lane Assist lane departure warning system, Climatronic air conditioning, a leather-trimmed multifunction steering wheel and 15-inch “Blade” alloy wheels. The charging time of the 32.2 kWh battery system (net value) is short: with 40 kW DC charging power, 60 minutes are enough to recharge the batteries to 80 percent. With alternating current, an 80 percent charge with 7.2 kW of power takes a little over four hours. The list price for the current version is 26,895 euros including VAT (in Germany), before deduction of the environmental and innovation premium of 9,570 euros (in Germany).

The e-up!’s market success contributes to Volkswagen’s electric offensive. To date, the company has sold more than half a million all-electric vehicles worldwide – including the 263,000 new BEVs registered in 2021 alone. As part of the ACCELERATE strategy, the proportion of BEVs is to rise to at least 70 percent of all Volkswagen brand deliveries in Europe by 2030. That is substantially more than one million vehicles. The company also intends to be net carbon-neutral by 2050.

Article source: www.volkswagen-newsroom.com

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