On March 13, 2024, in Wolfsburg/Beijing, Volkswagen Group CEO Obo Mu said, “With exciting products and a clear strategic focus, we are confident in the Volkswagen Group’s position in the ‘marathon’ of transformation in 2024. At the same time, we are fully aware of the various challenges the group faces and are working to address them to unleash the group’s huge development potential and promote sustainable development. Our rich and continuously expanding product portfolio is our advantage compared to other car manufacturers, allowing us to fully meet the needs of all kinds of customers. This flexibility is the core competitive advantage for our future success.” Stable market performance and performance plans lay the foundation for group development. In 2023, in a challenging market environment, Volkswagen Group’s brands performed well, with the group achieving steady performance thanks to the positive contributions of various regional markets. The group delivered approximately 9.24 million vehicles throughout the year, a 12% increase year-on-year. The group’s operating income reached 322.3 billion euros, operating profit reached 22.6 billion euros, and net profit after tax reached 17.9 billion euros, reflecting the strong resilience of the group’s business model. Despite the significant negative impact of derivative valuation effects of raw materials, the group’s operating sales return rate remained at 7.0%. Excluding the above-mentioned valuation effects, operating profit was 25.8 billion euros, corresponding to a profit margin of 8%. Net cash flow from the automotive business segment rose to 10.7 billion euros. As of the end of 2023, the net liquidity of the automotive business segment reached 40.3 billion euros, further demonstrating the group’s very stable financial condition. Earnings per preferred share reached 31.98 euros. The Volkswagen Group released key data from the previous fiscal year and its outlook for 2024 on March 1, 2024. The Group’s management board and supervisory board proposed a dividend of €9.00 per common share and €9.06 per preferred share to be distributed to shareholders at the shareholders’ meeting. This is an increase of €0.30 per share compared to the previous year, with a payout ratio of 28%. The proportion of electric vehicle deliveries in the total delivery volume continues to rise. In the past year, the Group’s electrification transformation made significant progress, reaching a peak of approximately 10% in the fourth quarter of 2023. The Group delivered a total of 771,100 pure electric vehicles last year, an increase of approximately 35% compared to 2022, achieving growth in all regional markets. In Europe, the Group once again established its leading position in the pure electric vehicle segment. Arno Antlitz, Chief Financial Officer and Chief Operating Officer of the Volkswagen Group, said, “In the challenging year of 2023, the performance of the Volkswagen Group was solid. We hope to continue this momentum in 2024. To ensure the sustainable success of the Group, we will focus on new product launches, further cost optimization, more effective use of synergies within the Group, and by continuing to drive profitable growth in our North American business to secure a strong position in regional markets.” The Group’s investment will reach its peak this year. The Group is committed to implementing its strategic investment plans to further enhance its competitiveness, expand its business in the most promising markets, and strengthen its product portfolio. The group plans to control investment in the 2025-2029 five-year plan within 170 billion euros, mainly for new products, regional markets, battery business, pure electric vehicle platforms, and continued hybridization of advanced fuel vehicle models. The group’s investment is expected to peak in 2024 and gradually adjust thereafter, reaching the target level of 11% of operating income by 2027. Performance plans will drive sustainable performance. Volkswagen Group is implementing its largest performance plan ever, aiming to achieve over 10 billion euros in sustainable financial impact by the end of 2024 throughout the group, to counter the effects of inflation and rising costs. The company is working on reducing costs and increasing efficiency, including optimizing raw material and product costs, reducing fixed and production costs, and increasing sales and after-sales service revenue. The performance plan is for all brands under the group and will create three major opportunities: strengthening the group’s competitiveness, improving efficiency, and releasing financial potential for investment in product and new business development to better meet the long-term needs of global customers. In addition, the plan also helps to ensure the long-term operation of jobs and factories. The group will continue to evaluate and develop the plan to effectively respond to the constantly changing market environment. The PPE platform brings superior performance and flexibility. The high-end electric platform PPE has outstanding performance, flexibility, and scalability. With the introduction of the PPE platform, the results of the group’s restructuring have already begun to show. Following the MEB platform, the PPE platform will further release the group’s synergies in the high-end and luxury car market.
In 2024, the group’s product portfolio will undergo a major upgrade, with the introduction of popular models such as the Golf, Tiguan, Passat, Jetta, and Superb, featuring advanced hybrid technology, as well as a range of new all-electric MEB models. In addition, a large number of all-new all-electric models will be introduced, including the all-new all-electric Macan and Audi Q6 e-tron based on the PPE platform, as well as the ID.7 and ID.7 Tourer, CUPRA Tavascan, and ID.Buzz long-wheelbase models based on the MEB platform. Due to the abundance of product highlights, the group expects a rapid increase in orders in the Western European market in the coming months, and anticipates an increase in orders for the currently available all-electric products. At the beginning of the new year, Volkswagen Group has shown a more positive growth trend compared to the previous year. Overall, Volkswagen Group is confident about 2024, and plans to launch more than 30 new products, the highest number in its history, benefiting from strong operational performance. The group also plans to increase its investment in battery strategy development and regional markets, thanks to the flexibility of its strategy. Volkswagen Group believes that electrification is the future of mobility. While the pace of electrification in some regions is impressive, progress is slower than expected in others. Therefore, the group has adopted a flexible strategy, investing heavily in electric mobility during the transition to electrification, while continuing to offer competitive, efficient, and highly attractive fuel models. The group is launching redesigned and all-new plug-in hybrid cars in many markets to further enrich its product portfolio. All brands of the group have contributed to the increase in operating profit. In 2023, all passenger car brands of the group performed well, achieving strong sales growth and an increase in operating profit. The operating sales return rate of the “core” brand cluster of the group increased from 3.6% to 5.3% over the past year, with a strong 21% increase in sales revenue to 137.8 billion euros. The “core” brand cluster made an important contribution to the improvement in performance. The “enterprising” brand cluster saw its sales revenue increase to 69.9 billion euros, with a growth rate of 13%, operating profit of 6.3 billion euros, and an operating sales return rate of 9.0%. Excluding the negative impact of 1.4 billion euros due to the effect of raw material valuation, the operating profit of this brand cluster increased from 6.6 billion euros to 7.7 billion euros, and the operating sales return rate increased from 10.6% in 2022 to 11.0%. The “luxury sports” brand cluster continued to maintain strong momentum, with sales revenue increasing to 37.3 billion euros, and an operating sales return rate of 18.6%, despite adverse factors such as product launch costs and rising production costs. The operating profit of Volkswagen’s financial services business was approximately 3.8 billion euros, a decrease of about one-third from the high point in 2022, mainly due to the expected decline in used car prices in 2023. In 2021 and 2022, the semiconductor material shortage led to new car supply problems, causing used car residual values to skyrocket. The Group has taken measures to hedge related risks at an early stage. The “Truck” brand group’s revenue increased from 39.5 billion euros to 45.7 billion euros, mainly due to sales growth, positive market and product mix, better unit selling prices, and growth in automotive service business. The Group’s operating profit margin also significantly increased from 4% to 8.1%, and operating profit increased from 1.6 billion euros to 3.7 billion euros. As CARIAD’s software developed is increasingly applied to vehicles under the Group, CARIAD’s royalty fee income increased by about 30%, reaching 1.1 billion euros. Due to the business model, CARIAD’s loss in the previous year was 2.4 billion euros. CARIAD is investing a large amount of early resources in developing future software architecture, which will generate revenue through royalty fees in the future. In terms of operations, the Group is accelerating the deployment of core software products, such as the Porsche all-electric Macan and Audi Q6 e-tron, which will be launched this year. The battery business continued to make progress. The business segment saw an operating loss of 400 million euros and a net cash outflow of 800 million euros due to high investments and cost expenditures in establishing teams in different countries. These investments are crucial to the Group’s strategic layout of the battery business and will drive an increase in the Group’s electric vehicle production. To accelerate the transformation with a clear China strategy and decision-making. In China, the Volkswagen Group is further accelerating innovation, promoting technology localization, and always adhering to a customer-centric approach. The group implemented a series of important strategic measures in 2023, adhering to the development policy of “In China, For China.”
Volkswagen Group’s director for China, Beirette, said: “Based on the ‘In China, For China’ strategy and Volkswagen Group’s deep presence in the Chinese market for 40 years, we are quickly tailoring our product portfolio for Chinese customers. With ongoing price wars, the market environment will remain challenging in the next two years. We are continuously strengthening our technological capabilities to solidify the foundation for sustainable business growth in the future. For the group, creating value is more important than market size, which ensures our investment in the next innovation leap.”
To meet market demand faster and seize development trends, Volkswagen Group is continuously enhancing its research and development capabilities. Volkswagen Technology Co., Ltd. will play a key role in this. The group has established an advanced production, research, and innovation center in Hefei, with Volkswagen Technology Co., Ltd. as its core, reducing the product development cycle by 30% to fully leverage the growth potential of the Chinese market. At the same time, Volkswagen Technology Co., Ltd. will develop entry-level vehicle platforms for the Chinese domestic market at “China speed.” The first batch of models based on this platform will enter the market as early as 2026. To further strengthen its electrification efforts, the group has established partnerships with Chinese domestic car manufacturers Xiaopeng Motors and SAIC Group to complement its product portfolio based on global platforms. From 2025 to 2026, the group will explore new niche areas in the dynamic Chinese electric vehicle market. Volkswagen Group has already formulated a clear product roadmap: by 2030, each of its brands will offer no less than 30 pure electric models.
Meanwhile, over 1000 software experts at CARIAD China are accelerating the integration of the latest digital technology into the vehicle models of various brands within the Volkswagen Group. To further deepen its development in China, the group has also established partnerships with high-tech companies in China, including collaborating with Horizon Robotics to develop autonomous driving technology, partnering with Zhongke Chuangda to develop information entertainment systems, and working with Shanghai Mucun Industrial Design to enhance the user experience.
In 2024, Volkswagen Group will continue to adhere to the “In China, For China” strategy, accelerate localization, and apply intelligent technology to its brands’ products, steadily expanding the portfolio of intelligent connected vehicles. To ensure the implementation of strategic initiatives and investments, the Group is optimizing cost structures to provide more competitive products to Chinese customers. “Regenerate +” strategy: Volkswagen Group fully implements sustainable concepts Volkswagen Group comprehensively promotes sustainable development in the categories of nature, employees, society, and entrepreneurial spirit. The Group has developed a comprehensive sustainable development strategy, covering all brands under the Group. The accelerated development of electric mobility is crucial for reducing carbon emissions. By 2024, Volkswagen Group will vigorously promote electrification and undertake social responsibility through sustainable development strategies. For example, the Group is advancing one of the most ambitious electrification efforts in the automotive industry, covering all market segments. The Group further focuses on carbon reduction in the production process. Volkswagen Group plans to achieve net zero carbon neutrality at all global production sites by 2040, 10 years ahead of the original plan. Compared to 2018 levels, the Group is committed to reducing 90% of greenhouse gas emissions and plans to achieve this goal through changes in energy supply structure and increased energy efficiency measures. For example, by 2030, all global factories, including those in China, will achieve 100% external electricity supply from carbon-neutral sources. Currently, all of the Group’s factories in Europe are using 100% green electricity, and eight European factories in operation have achieved net zero carbon neutrality.