Volkswagen Group has set a goal to achieve a 10% operating profit margin in its automotive division by 2030 through reducing excess production capacity and streamlining its investment portfolio. The company also plans to enhance its software-defined vehicle (SDV) capabilities in collaboration with partners like Xiaopeng and Rivian, and to introduce 20 new models this year to strengthen its leadership in electrification.
Oliver Blume, CEO of Volkswagen Group, unveiled these plans during the company’s online annual shareholder meeting on June 19. The eight key strategies outlined include reducing complexity, enhancing technology focus, cutting excess production capacity, strengthening regional responsibilities, optimizing the investment portfolio, improving operational efficiency, fostering a performance-oriented culture, and simplifying the group’s management structure.
Blume stated, "To respond to increasing geopolitical tensions, intensifying competition, and growing trade barriers, we will strengthen resilience in terms of costs, organization, and technology. Based on these eight strategies, we aim to create future investments and growth while enhancing our financial robustness to become the most attractive automotive manufacturer in the world by 2030."
The detailed plan aims for an operating profit margin of 8% to 10% in the automotive sector by 2030, with a target of achieving over 60% of free cash flow relative to operating profit. Key measures include strict cost management, efficiency improvements, and selective investments in future technologies. Building on the competitive edge of launching over 30 new vehicles last year, the company plans to introduce an additional 20 models this year.
Volkswagen will also enhance its competitiveness in the electrification sector. In 2025, global deliveries of pure electric vehicles are expected to increase by 32%, with a growth rate of 66% in Europe, resulting in a market share of 27%. Notably, five of the ten best-selling electric vehicle models in Europe are from Volkswagen Group, which aims to expand its entry-level market through urban electric vehicle models like the Volkswagen ID. Polo, ID. Crozz, Cupra Raval, and Skoda Epic.
Additionally, the company will strengthen its software capabilities in collaboration with Xiaopeng in China and Rivian in the U.S., while also enhancing its in-house battery capabilities through its subsidiary PowerCo. PowerCo has begun battery production in Germany and will soon start operations in Spain and Canada.
To ensure sustainable growth, Volkswagen aims to cut costs significantly. The group has already saved €1 billion across its operations by 2025 and plans to achieve over €6 billion in net cost savings annually by 2030. A workforce reduction affecting 50,000 employees has been implemented across Volkswagen, Audi, Porsche, and its software subsidiary Cariad, with agreements for retirement-related arrangements for over 28,000 employees by 2030. This restructuring has led to an average cost reduction of 20% at Volkswagen's German plants last year.
Blume concluded, "While external conditions remain challenging, we will leverage our strong brands, attractive products, technological capabilities, synergies, and global economies of scale to turn crises into opportunities."
* This article has been translated by AI.
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