Welcome End of Year Roundup - December 6, 2018 - Volkswagen AG
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End of Year Roundup December 6, 2018 Welcome
End of Year Roundup December 6, 2018 Ralf Brandstätter Chief Operating Officer of the Volkswagen Brand
ID. R Pikes Peak
The Volkswagen strategy has three phases
1 Radical restructuring 2 Leading e-company 3 Major transformation
Optimize profitability Full connectivity New mobility
• Major SUV offensive: • Fully-connected vehicles • Business model for autonomous
30 new models • Leading digital mobility ecosystem driving
• Restructuring and strategic • World market leader in e-mobility • Profitable offering for new
realignment brand and regions mobility solutions and emission-
• Platform-oriented plant free driving
assignment
2020 2025
Touareg: the brand flagship
Statement in design,
technology,
driving dynamics and
comfort
Tharu: the powerful family SUV from China
Impressive space
Tayron: addition to the SUV family in China The mid-size model serves the fast-growing SUV market
T-Cross: rounds off the SUV offering Combination of diversty, Connectivity and outstanding Design
Virtus: new model for the South America strategy Das Mittelklassemodell bedient den stark wachsenden SUV- Markt Superior package with emotional design and latest connectivity features
Jetta: the seventh generation of the global bestseller generous space and efficient drive technology
Volkswagen brand 2018 product highlights
up! GTI Touareg Teramont Golf GTI TCR Polo/Virtus Bora Tharu
2 0 1 8
Jetta e-Golf ID. R Pikes Peak Lavida T-Roc LWB Tayron WP T-Cross WPWe have given our electric offensive a powerful boost
September 2018 November 2018
ID. Workshop Dresden Transformation Zwickau
2019 2020 2021
2021
20222018: a year of contrasts
Record deliveries to Q3 WLTP
New models presented Petrol-diesel mix
Powerful boost to electric offensive
Political framework
2018 Q1 Q2 Q3 Q4WLTP as the ultimate stress test
All engine-transmission variants again ready to order as planned by the end of
December
EGV in Configurator
>90%
>70%
November Plan DecemberLevers for the reliable planning for WLTP in 2019
-25% variants + 30% test rig Optimized processes
in Europa capacity and IT systems
6 Tools & systems 7 Secure “early phase“ 1 Reduce scope 2 Increase capacity
5 Improve organization 4 Establish robust 3 Detail timelines
processesMassive shift in petrol-diesel mix
Western Europe - January - September 2018
60%
50%
Petrol
Diesel
40%
30%
2011 2012 2013 2014 2015 2016 2017 Jan. - Sep.
2018Timely plans for expanding petrol engine capacities1
Example: EA211 1.5l TSI Evo
1,250,000 Diesel
units p.a.
1,000,000
Units p.a.
Petrol
500,000
units p.a.Political framework
• Brexit in UK • Trade war between • Import duties on
US and China German vehicles
• Financial crisis in Italy
• Political crisis in TurkeyOur package of measures for more productivity and efficiency • Rigorous expansion of platform orientation • Increase efficiency at our plants • Reduce complexity – fewer variants for more success • Optimize material costs to realize target return • Lean administration and less bureaucracy
Rigorous expansion of platform orientation
MQB share in overall production (percent | rounded)
Other
80% MQB
60%
40%
20%
2015 2017 2018 2020Increase efficiency at our plants
+ 30% - 30%
Productivity Investments
We want to achieve a strong increase in production at our We will make massive cuts in factory costs and
sites worldwide by 2025 investments: reduction of more than €1.5 billion compared
with todayReducing variant diversity and complexity
Fewer variants for more success
• Reduce complexity of offering
• Meaningful reductions in engine-transmission variants and equipment lines
• High-variant modules and components will be optimized
Wheel rims - 40% Steering wheels - 60%
Golf 7 Golf 8 Golf 7 Golf 8Optimize material costs to realize target return
Efficiency concept Cost effects
• Reduce variants • Increase economies of scale
Optimized
• Simple technical solutions material costs effects
• Low component complexity • Use Industry 4.0
• Region-specific solutions • Optimize manufacturing concept
CO2
NCAP
Digitalization
Value Engineering Value Sourcing
Material cost Material cost
predecessor successor
model modelLean administration
Systematic implementation of a flat and agile organization
• Manager-to-staff ration 1:8
• Micro manager-to-staff ratio i.e. 1 < 5
• Optimized hierarchy level
max. 60 employees Manager + 2 Levels
max. 500 employees Manager + 3 Levels
more than 500 employees Manager + 4 Levels
Implementation begins in 2019Volkswagen is managing two major transformations
Transformation paths
Volkswagen OS &
Modular Transverse Toolkit (MQB) One Digital Platform (ODP)
• Over 55 million 1st-generation • Connectivity
vehicles • Updates & upgrades
• Over 50 2nd-generation • Autonomous driving
vehicles • Digital services
Conventional drives
E-mobility
Fully-connected vehicle and autonomous
driving Modular Electric Toolkit (MEB)
• Over 15 million vehicles in first
project phaseNew alliances strengthen Volkswagen’s ability to create
a connected car, customer and retail ecosystem
Microsoft
Device related Service/Customer
related
CUSTOMER
VEHICLE
Acquisition/
In-house
developments
ONE DIGITAL PLATFORMExcellence in integrity and compliance guides our actions
Strategy
1 Holistic compliance &
Risk Culture of
Management 1 Integrity integrity program
2 3
2 3 Resolute
Speak-up 1. Win back customer trust
Environment Accountability
4 4 5 5 2. Take pride in our working
environment
3. Lay the foundation for
future generations
T4I – Together for IntegrityID. family: it’s not an evolution, it’s a revolution
“100% emission-neutral”End of Year Roundup December 6, 2018 Dr. Arno Antlitz Member of the Volkswagen Brand Board of Management for Controlling and Accounting
Solid operating performance from January to September 2018
Operating Profit
Sales 1) Sales Revenue before special items
2.8 million vehicles € 62.5 billion € 2.3 billion
+5% +7% -6%
RoS RoS
4.3% 3.7%
Q1-3 Q1-3 Q1-3 Q1-3 Q1-3 Q1-3
2017 2018 2017 2018 2017 2018
1) These figures do not include sales of our Chinese joint ventures.Strong earnings improvement in the first half of the year
Q1 Q2 Q3
Operating Profit in H1
before special items (€ billion) Product Offensive
+20 %
Zukunftspakt
RoS RoS
Tournaround in the regions
4.5% 5.0%
H1 H1
2017 2018WLTP with significant impact on third quarter 2018
Q1 Q2 Q3
Sales (‘000 units) Operating Profit (€ billion)
-0.2
821 822 0.2 -0.4
0.7
-42 0.1 -0.1
Impacted by WLTP
0.2
Q3 Q3 Q3 Volume/ Currency Exchange Product Fixed Q3
2017 2018 2017 Mix/ Pricing Rates Costs Costs, 2018
Price others
All figures shown are rounded, so minor discrepancies may arise from addition of these amounts.Key levers for improving the result: Status update
Turnaround
Product Offensive Zukunftspakt in the regions
+ +
Achievements: Achievements: Achievements:
• SUV portfolio widened: T-Roc, • Realized cost improvements • Break even in Russia already
Tiguan, Tiguan Allspace, of more than €2 billion achieved in 2017
Touareg, Atlas • > 9,300 early retirement • SAM to break even in 2019
• Another SUV coming soon: contracts • Improvement in NAR continues
T-Cross • Current headcount reduction
• Increase of MQB share to 60% better than target
in 2018Product Offensive – SUV share on the rise
January to November 2018 vs. 2017
Global Europe NAR
100%
Other
26% 37%
SUV 14% 19% 17% 17%
2017 2018 2017 2018 2017 2018Zukunftspakt – On track to deliver
Cost Savings (2018 full year forecast) Early retirements (contracts signed)
€ 2.2bn 9,300
More than € 2.2 bn expected to More than 9,300 people signed early
be realized by the end of the year retirement contracts and will leave
(2020 target for Germany: € 3 bn) the company by 2020 at latest
(net) Headcount reduction New jobs
> 5,600 (1,250 better
than ZP target) > 1,900
Since the start of the Zukunftspakt Headcount increase in future oriented
headcount has been reduced business areas (software development,
by more than 5,600 people connectivity, new mobility solutions)
(gross reduction ~ 7,500 people)Regions – Positive development continues
NAR Russia
• US Deliveries • Deliveries
Jan.-Nov. 2018: +4.1% Jan.-Nov. 2018: +19.9%
• Product highlights: • Products highlights:
Atlas, Tiguan, new Jetta Tiguan Allspace and new Touareg,
• Profit: Improved vs. prev. year Polo
• Break-even expected in 2020 • Profit: Still positive despite
devaluation of Ruble
SAM
• Deliveries
Jan.-Nov. 2018: +11.7%
• Product highlights:
New Polo and Virtus
• Profit: Improved vs. prev. year
• Break-even expected in 2019Turnaround in the US with new products from 2017 onwards
Deliveries to US customers (‘000 units) SUV offensive #1 New Sedans SUV offensive #2
500 2017 2018-19 2019-21
+4.1 %
309 322
Atlas Jetta Midsize SUV 5s
250
Tiguan Passat Compact SUV
0
2012 2013 2014 2015 2016 2017 1-11 1-11
2017 2018 ID Crozz
Refreshed Golf Arteon
Market
Share % 3.0 2.6 2.2 2.0 1.8 2.0Our Mission „E-Mobility for All“ requires substantial upfront expenses From 2019 - 2023 we will invest €9 billion in Capex and R&D to realize the leap to the top of electric mobility
New business areas require increasing resources E-Mobility Charging Digital Ecosystem Achievements: Achievements: Achievements: • Ramp up of MEB in Europe, • People’s Wallbox • Several applications already China, and NAR • Foundation of launched • SOP of ID. in 2019 Group Charging Entity • Updates and Upgrades • ID. CROZZ, ID. BUZZ and ID. • We Charge App over the air VIZZION to follow on • Co-Foundation of IONITY • User ID MEB platform • Operating sytem vw.OS
Improving the return on sales despite substantial headwinds
Operating Return On Sales (in %)
Turnaround Electrification CO2/Emission
Product Offensive Zukunftspakt in the regions and Digitalization Legislation RISKS
Economics, trade,
raw materials,
currencies
4.0 - 5.0
1.8
2016 2020We aim to achieve our long term targets earlier than planned
Operating Return On Sales (in %)
≥ 6.0 > 6.0
4.0–5.0
1.8
2016 2020 2022 2025
Target Target TargetEnd of Year Roundup December 6, 2018 Jürgen Stackmann Member of the Volkswagen Brand Board of Management for Sales & Marketing
Volkswagen brand deliveries above previous year despite challenges
Deliveries to customer | Jan - Nov 2018 (YoY)
North America Europe
524,100 -2.9% 1,619,100 +4.3%
China
2,820,100 -0.5%
South America World
434,400 +11.7% 5,704,200 +1.2%New European dealer contracts – a milestone in our Future Sales Project Dirk Weddigen von Knapp and Thomas Zahn Dr. Matti Pörhö and Jürgen Stackmann
Today’s core business with its focus on products
Vehicle
centricOur Future Sales Model builds on today’s value chain and expands
into a mobility system
Charge Upgrade
Connect
Charge
Connect +
Park
Connect
Fleet Deliver
Share ExperienceVolkswagen‘s all-electric car-sharing service “We Share” starts in Berlin in April 2019
New alliances strengthen Volkswagen’s ability to create a
connected car, customer and retail ecosystem
Microsoft
Device related Service/Customer
related
CUSTOMER
VEHICLE
Acquisition/
In-house
developments
ONE DIGITAL PLATFORMProduct highlights of Volkswagen brand 2019
T-Cross LWB e-Lavida e-Golf Passat T-Roc Cabrio WP
2 0 1 9
T-Cross e-Bora Polo Passat Golf WP ID. WPNew Golf - the benchmark and icon of compact cars
ID. - the electric car for millions of people
With the ID. starts a new era for Volkswagen
Emission-neutral
e-mobility
Up to 550 kilometers*
Fully connected vehicle
innovative interface
Updates over the air
*WLTP | Volkswagen prognosis before homologationOur new cars will boast a radically simplified complexity
Choose your Model
Choose your Range e.g. 550 km
Choose your Colour
Package 1
Choose your Package Package 2
Package 3
Add Services2019/2020: “Magic” years of our Transform 2025+ strategy Full deployment of SUV range Connected car, customer & retail Start of e-commerce via ID. New Brand Design
End of Year Roundup December 6, 2018
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