Goals and Strategies
With “The Group Strategy – Mobility for generations”, which was rolled out in 2024, we are tackling the challenges facing the automotive industry worldwide. Our vision is to be The Global Automotive Tech Driver.
Fast-moving global megatrends, rapid technological advances, changes in customer requirements and, last but not least, the macroeconomic and political climate and regulatory framework are presenting the automotive industry with historic challenges. Artificial intelligence is creating opportunities that were not even conceivable until recently and bringing about change in nearly all industries and walks of life. Society and its values are also in a state of flux. Awareness of our planet and how our way of life is impacting on it is becoming increasingly important.
Against this backdrop, we scrutinized our own direction in fiscal year 2024 and developed “The Group Strategy – Mobility for generations”. This new Group strategy addresses important topics from previous strategies and takes these to the next level.
The first step entailed formulating the main requirements and overarching targets for the strategy. They include resilience, so that we position our global business robustly in times of geopolitical tensions; adaptivity, so that we have the capacity to respond quickly to changes in the course of the transformation of the mobility industry; and financial robustness, so that we can finance the necessary investments in product innovations.
REQUIREMENTS AND OVERARCHING TARGETS OF THE STRATEGY
From these we derive our strategic vision of being The Global Automotive Tech Driver. This aggregates the material areas for action for the Volkswagen Group in three fields:
- Resilient positioning in all relevant regions in order to leverage global synergies;
- Refocusing areas of expertise within the value chain, also increasingly in conjunction with partners
- Strong brands with profitable product and service offerings, to be managed by the Group in efficient brand groups.
CORE TOPICS AND IMPERATIVES OF THE GROUP STRATEGY
To realize our vision of becoming The Global Automotive Tech Driver, we defined clearly delineated corporate goals in the form of nine imperatives as part of the Group strategy assigned to three core topics:
- Excite customers globally:
We aim to excite customers globally by offering a strong product portfolio, an attractive range of services throughout the entire customer and product life cycle and competitive technologies. - Unleash our full potential:
We intend to unleash our full business potential by consciously deciding between synergies and implementation speed, making our Company more attractive to talented individuals and unlocking the opportunities provided by artificial intelligence. - Focus on fundamentals:
We are focusing on creating a robust company base with reduced cost structures and resilient structures, and we see sustainability as a basic maxim for our actions.
We continue to use the OKR (Objectives and Key Results) method to implement our strategic objectives. Accordingly, strategic objectives and envisaged key results are defined for the individual imperatives. These are to be realized largely through time-limited projects and work packages, each of which can be measured by specific key performance indicators. The degree of achievement is continuously reviewed and the overall picture is presented to the Board of Management twice per year. As such, the relevance of the imperatives, and their objectives, milestones, projects and work packages are regularly reviewed at Group level. Their focus is continuously monitored and adjusted as necessary.
In the following, we describe the individual imperatives and the basic focus of each one.
Focus on iconic and profitable portfolio
Efficient portfolio management and the exploitation of synergies within the Group are a cornerstone of the Group strategy. Direct regional control of our customer-centric and distinctive vehicle portfolio is paramount here, with particular emphasis being placed on the positioning of the vehicles in the individual markets, true to the spirit of the brand. This also entails concentrating on a successful, profitable portfolio for Europe, sharpening our focus on attractive segments in North America, and further localizing and strengthening our activities under our “in China for China” strategy.
Drive life-cycle customer excitement
Customer centricity is an important pillar of our Group strategy. Here, our aim is to put customers front and center of our activities and excite them with our products and services throughout the vehicle’s entire life cycle, not just when they are deciding which vehicle to buy. As mobility needs change, we expect to see demand for use-based vehicle and mobility services (for example subscription models and self-driving robotaxis/shuttle services) soar up to 2035. To maximize the potential of the use-phase business, we are striving to create a synergetic and holistic ecosystem that incorporates all of our Group products and services. This will enable us to make our product offering user-centered and to support and gain the loyalty of our customers throughout the entire life cycle.
Boost technology leadership
Software, batteries and mechatronic platforms are the automotive technology areas that will be important in the future and will largely determine the pace of innovation and cost per vehicle.
The “boost technology leadership” imperative prioritizes consistent, coordinated planning of these automotive technology areas for this reason. Our technology strategy envisages a progressive reorganization of the Group over the next ten years, turning it into an efficient, leading global automotive technology player. Here we will concentrate on vehicle software, batteries and our platforms.
More than ever before, the car of the future and the associated customer experience will be shaped by software. That is why the Volkswagen Group is pursuing the vision of a software-defined vehicle (SDV). Whereas in the past the starting point for vehicle development was the hardware, future vehicle development will center more on the software and the related electrical/electronic high-performance architecture. Consequently, our development process should start with the software. We are therefore designing the vehicle with the mobile, digital, smart world of our customers in mind. Our collaboration with Rivian and XPeng will provide us with valuable potential for reaching series production rapidly, thus enabling us to raise the bar in the automotive market of the future.
As the technological and economic centerpiece of electric vehicles, the battery is a decisive factor not only in terms of price, but also in terms of range and charging speed, making it a determining factor for the appeal and market success of e-mobility. The Volkswagen Group bundles business activities along the battery life cycle in the Group’s own technology company PowerCo with the aim of developing into a profitable provider of sustainable, competitive battery technology for electric vehicles. Going forward, PowerCo will rely on an integrated value chain and aims to cover the relevant areas – from the procurement and processing of raw materials to cell production and recycling – both independently and in collaboration with partners.
Platform development is a significant area of expertise of the Volkswagen Group. With the Scalable Systems Platform (SSP), we are creating the next generation of an all-electric, fully digital mechatronics platform based on a standardized software architecture. The Volkswagen Group’s aim with this scalable platform is to rapidly and efficiently provide its customers with innovative functions and technologies, across all brands. Through the reduction of complexity and the number of variants, the SSP will provide potential to leverage extensive synergies and enable fast, regular technology updates, while ensuring the necessary differentiation between the products of the individual brands in the Group’s portfolio.
Balance speed and scale
Implementing the strategic goals by 2035 requires a clear allocation of responsibilities and transparent decision-making structures within the Group. The “balance speed and scale” imperative therefore aims to achieve an optimal balance between Group synergies and decision-making speed in order to achieve cost efficiency while meeting the necessary reaction rates in the global automotive market.
The imperative seeks to optimize the interplay between corporate functions, brand groups and business areas, which in turn will allow major synergies to be leveraged in relation to software, batteries and the use phase in the Group. In addition, this imperative will focus on management of the China and North America regions so as to enable a rapid response to geopolitical changes in these regions. Since the Group has an extensive portfolio of financial investments in addition to its core automotive business, we also continually strive to future-proof and optimize this portfolio.
Empower talent across organization
In order to meet the demanding requirements arising from growing complexity, rapid changes in customer expectations and the unpredictable challenges that lie ahead, we need to ratchet up our performance, becoming more efficient, more agile and more adaptable. As we see it, a key factor here is boosting the efficacy and entrepreneurial spirit of our employees so that we can unleash the full potential that lies within our organization.
This transformation will be holistically aligned and supported: our employees’ skills profiles will be tailored to the requirements of their jobs in a forward-looking manner. Here, emphasis is also placed on being able to react flexibly to changes and hone the necessary skills in specific areas, for example in the use of artificial intelligence. To maximize the effectiveness of individual strengths, we seek to create a framework in which teams can work together effectively, take responsibility for joint results, and develop agile ways of thinking and working to increase our flexibility. Our aim here is not only to contribute to the satisfaction of the employees within our organization, but also to ensure that we remain attractive to skilled workers whose expertise can help us to remain competitive.
Spearhead AI transformation
The breakneck development of artificial intelligence (AI) is opening up huge potential for optimizing processes and products throughout the entire value chain. The Volkswagen Group is committed to fully exploiting this potential and plans to extensively ramp up AI applications throughout the Group in the coming years. To this end, we are working to create the necessary conditions, which includes developing a state-of-the-art IT infrastructure and ensuring data transparency and availability – even beyond the Group’s borders. At the same time, we are using this imperative to adapt our business processes so that they are optimally aligned with the use of AI and can make full use of its potential. Our employees are one of the main drivers of this transformation. We focus on providing selective training and skills development in dealing with AI, ensuring synergetic implementation in the Group so that the advantages of AI transformation can be comprehensively realized in all areas of the Company.
Drive cost disruption
The latest technology developments such as increased automation using artificial intelligence, reduction of product complexity through e-mobility and rising global cost competition are likely to bring about significant changes to automakers’ cost structures in the near future. The “drive cost disruption” imperative addresses these challenges by developing possible measures to reduce costs and quantify them using the key components of product manufacturing costs. These measures are then transferred into an overarching cost ambition for 2035.
Increase global resilience
The Volkswagen Group believes it will face, among others, a variety of geopolitical challenges in the coming years and decades. These include a global shift in the political and economic balance of power, systemic rivalry, growing geopolitical conflicts and the ineffectiveness of global governance, which could create more instability and lead to a new world order. In the age of “slowbalization”, we expect to see a continued slowdown in the pace of globalization, as measured by world trade flows. We will see an increase in protectionist measures, disruptions to supply chains and divergent regulations in the future, which is likely to cause market fragmentation. In this imperative, in anticipation of continued global decoupling, we assess the risks for the Volkswagen Group, develop solutions for the different regions and provide Group-wide strategic guidelines for orientation.
Elevate sustainability
Sustainability is deeply rooted in the Volkswagen Group and an integral part of our Group strategy. We are providing important and goal-oriented new impetus with our regenerate+ Group sustainability strategy presented in the fiscal year 2024. Society needs engagement that generates positive added value in order to help our planet to regenerate and shape a future worth living in for current and future generations. We want to contribute to this and take a broad and comprehensive approach to sustainability – environmentally, socially and economically. Our vision is to become a mobility provider with positive added value for nature and society. To this end, we will seek to work in partnership with all our stakeholders in order to learn and further improve. Together, we follow a vision for the Volkswagen Group and drive sustainable value creation. The regenerate+ Group sustainability strategy features clear measures in four dimensions: nature, our people, society, and business.
THE TOP 10 PROGRAM
The Group Strategy – Mobility for generations sets out our long-term direction with nine initiatives. We continue to develop an annual Top 10 program at the Group level so that the long-term goals of our Group strategy can be implemented swiftly in operations throughout the year. This program defines the action areas with top priority for the Group in the current fiscal year, thus contributing to the long-term target achievement of the strategy.
The action areas of the Group’s Top 10 program for fiscal year 2024 covered the areas of performance, products, regions, digitalization, software, platforms, battery, mobility solutions, sustainability as well as teams and organization. We report on the main goals achieved in the fiscal year under the Group’s Top 10 program in particular in the chapter “Sustainable Value Enhancement”.
Beyond the Group program, the Top 10 program methodology has also been adopted by many business units in their functional area strategies and is being used to accelerate implementation of strategies with a high level of focus.