Overview of the Volkswagen Group’s Global Operations
From an Industry Benchmark in Platform Sharing to the Most Profitable
Automotive OEM by 2020
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June 2013
1
Contents
Section
Slide Numbers
Executive Summary
5
Research Scope, Objectives, Background, and Methodology
12
Segmentation
19
Introduction
21
Volkswagen Group’s Product Portfolio and Sales Performance
28
Overview of Volkswagen Group’s Organizational Structure
44
Volkswagen Group’s Objectives and Strategy
53
Volkswagen Group’s Vision—2018 and beyond
54
Technology Strategy
59
• Research and Development Strategy
62
• Platform Strategy
69
• Lightweight Strategy
82
• Powertrain Strategy
90
• Vehicular Communication Strategy
93
Market Channel and Dealer Management Strategy
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97
3
Contents (continued)
Section
Slide Numbers
Volkswagen Group’s New Mobility Business Models
106
Key Conclusions
110
Appendix
114
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Executive Summary—Key Findings
The Volkswagen Group: Key Findings, Global, 2013
1
Volkswagen Group is undergoing a fundamental ecological restructuring to accelerate fleet and
greenhouse gas (GHG) CO2 targets, which are linked to a pioneering effort in lightweight
technologies (as earlier pursued only as a differentiation factor for Audi from BMW). The target is
to achieve a < gm/km CO2 by 2015, or a % reduction in fleet CO2 emission compared to
2006.
2
The Volkswagen Group’s modular toolkit strategy is a game changer. Of the production that will
take place, % will come from just
key platforms. Synergies of about
billion euros are
expected.
3
China is emerging as the next key research and development (R&D) center after Wolfsburg.
Local initiatives include developing eMobility vehicles from scratch e.g., micro-mobility concepts,
eBikes, and eScooters.
4
The Volkswagen Group has a unique brand management structure with strict guidelines for brand
hierarchy, which means a clearer decision making process, strong follower rules, clear horizontal
technology deployment strategy, and research and development (R&D) cost burden sharing.
Source: Frost & Sullivan
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Executive Summary—Snapshot of The Volkswagen Group
In 2012, the Volkswagen Group achieved record sales of over 9 million units with its biggest markets in
Europe and China accounting for % and % of sales, respectively.
The Volkswagen Group: LCV Sales, Brazil, China, India, W. Europe, US, 2012 and 2018
China
US
W. Europe
2012
2012
2018
2012
2018
2012
2018
2018
India
Brazil
2012 2018
Note: All figures are rounded, and only key markets have been represented in the chart. The base year is 2012.
Source: Volkswagen, LMC, and Frost & Sullivan
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Executive Summary—The Volkswagen Group Introduction
Synergy among R&D, actual product development, and serious integration was what allowed the Volkswagen
Group to cross the
million unit shipment mark for the first time.
The Volkswagen Group: Key Performance Metrics, Global, 2010, 2011, 2012
2012
2011
2010
M
M
M
Unit Sales
Revenue (euro)
Op. Margin
RoS
%
%
%
%
%
%
Profit after tax
(PAT)
Top 5 Factors Responsible for Growth
1. Strongest brand portfolio is in China, Volkswagen’s single largest car sales market
2. High return efficiencies (plant utilization) on planned investments
3. Technology leadership in powertrain/alternate powertrain technologies addresses cost of
ownership issues for end consumers
4. Strong leadership recognition in design and quality
5. Slow but gradual shift from decentralized mode of operation
6. Aggressive follow-up to ensure success of Strategy 2018
Note: * From The Volkswagen Group’s annual reports.
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Source: Volkswagen and Frost & Sullivan
8
Executive Summary—Snapshot of Key Performance Indicators
A clear strategy to ensure synergy among its diverse brands is key to strong financial performance for an
OEM as diverse as the Volkswagen Group.
The Volkswagen Group: Key Performance Indicators, Global, 2010, 2011, 2012
The Volkswagen Group
2012
Group Compositions
Brands (inc. Porsche)
Growth Over the Last Four
Years
2 new brands added
Number of Employees
~
%
Revenue Sales
€ billion
%
Net Profit (%)
%
%
Ranking in Total Sales
% MS (Nos. 3)
---
R&D Spend
€ Billion
R&D Employees
%
Number of Patents Filed
---
RoS (before tax)
%
RoE (before tax)
%
P/E Multiple
x
Debt/Equity
Market Cap
EV/EBIDTA
%
%
%
-----
billion (USD)
---
--Source: Volkswagen Media Website, Volkswagen Group Interim Report, September 2012, LMC Automotive, and Frost & Sullivan
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Executive Summary—Five Key Drivers that will Ensure Volkswagen
Group’s Future Automotive and Financial Success
Brand Unification/
Synergy Creation
• Effective and efficient responsibility allocation by brand, including areas
such as R&D, quality procurement, and financial services
Strict Guidelines for
Brand Hierarchy
•
•
•
•
A clear decision making matrix with strong follower rules
Horizontal technology deployment strategy
R&D cost burden sharing
Channel strategy
Massive
Forward Integration
Strategy
•
•
•
•
Control network development
New outlets
Control aftersales parts (margins)
Influence fleet business (via leasing rates)
Standardization
Drive (Pre and Post
SOP)
• Importer process model
• Dealership outlook and feel (flagship versus lifestyle centers)
• Synergy from Porsche Holding Salzburg
Emergence of China
as the New
Wolfsburg
• Application engineering-based competency shifts towards advanced
engineering
• Independent development in eMobility (cars, eBikes, and eScooters).
Source: Frost & Sullivan
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Executive Summary—Key Conclusions
To launch a vehicle portfolio that covers all niches and reaches across all
segments is unique, and it showcases the Volkswagen Group’s technology
and product leadership.
The
Volkswagen
Group
Efficient technology sharing across its brand portfolio will allow the
Volkswagen Group to target key growth markets in a bid to achieve
its Strategy 2018 goal of sustainable growth and profitability.
Volkswagen’s ambitions on S-2018 predominantly rest on the
modular toolkit strategy. While there are significant advantages to
be gained, the increased risk due to the shared platforms has to be
taken into account.
The Volkswagen Group believes an opportunity for a 13th brand might be
critical to achieve 2018 targets. One possibility is the acquisition of Alfa
Romeo and another is the launch of a new budget brand.
Source: Frost & Sullivan
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Research Aim, Objectives, and Methodology
Aim
The aim of this research service is to provide a strategic overview of the Volkswagen Group with the intent
of identifying and understanding factors that contribute to the success of the organization.
Objectives
• To deep dive into the key operational strategies of the Volkswagen Group with a focus on the corporate
structure, shareholder strategies, R&D strategies, localization strategies, production capabilities, and
performance
• To provide an overview of the Volkswagen Group’s product strategies including its product planning,
product development, product positioning, and branding strategies
• To explore the growth of the group’s regional operations, including the evolution of Volkswagen
operations in China
• To provide market size and forecast of the current and future Volkswagen Group’s global light
commercial vehicles (LCVs) for 2009–2019
• To provide a competitor analysis that analyzes competitive factors, competitor market shares, and
product portfolio analysis and capabilities
Source: Frost & Sullivan
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Key Questions this Study Will Answer
The Volkswagen Group: Key Questions this Study Will Answer, Global, 2012
What are the drivers behind the Volkswagen Group’s automotive and financial success?
How does the Volkswagen Group effectively and efficiently manage its portfolio of brands, and what
are the group’s market channel strategies on a global level?
What are the Volkswagen Group’s product, technology, and market channel strategies on a global
level?
What are the risks and opportunities for Volkswagen Group?
Source: Frost & Sullivan
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