With the TRANSFORM 2025+ program we will set the course for the brand Volkswagen over the next decade and beyond. The new strategy focuses on clearer brand positioning across the various regions and segments, backed by significant improvements in efficiency and productivity. At the same time, we will be making massive investments in e-mobility and connectivity. Enthusiastic customers, earnings power ensuring a secure future, sustainable mobility and a new team culture will lay the foundation for the Volkswagen brand's journey to the future. Our new vision which is valid throughout the world is: "Volkswagen: Moving People Forward".
Volkswagen faces its social responsibilities head on by adhering to the two basic principles of continuity and participation. And we undertake sustainable projects through long-term partnerships. Here on the following website you’ll find lots of examples of current projects through which we’re pursuing this goal.
Think of an environmental role model. Did you think of us at Volkswagen? Probably not. But that’s exactly what we’re aiming to be in the field of the environment: a model company. We want to deliver mobility for everyone around the world and, as we do so, to minimize the impact on the environment. On the following website you’ll find lots of examples of current projects through which we’re pursuing this goal.
In the long term, a company can only be successful if it acts with integrity, complies with statutory provisions worldwide and stands by its voluntary undertakings and ethical principles, even when this is the harder choice. We remain committed to this principle – especially in light of the misconduct uncovered in the 2015 financial year, which runs contrary to all of the values that Volkswagen stands for. Compliance must be second nature to all Group employees.
The history of the Volkswagen brand began with the “Käfer”; development work on this Nazi prestige project began in 1934. On May 28, 1937, the “Gesellschaft zur Vorbereitung des Deutschen Volkswagens mbH“ (Company for the Preparation of the German Volkswagen Ltd.) was formally established. The name was changed to “Volkswagenwerk GmbH” in 1938, and the company built its main plant in what has become Wolfsburg. However, the outbreak of war and integration in the arms industry prevented mass production of the Volkswagen (“people’s car”) – instead, military vehicles and other armaments were produced using forced labor.
After the war, the British instructed Volkswagen to build the Volkswagen saloon at the end of 1945. With the Type 1 (Käfer) model, and the Type 2 (Transporter) model added in 1950, Volkswagen became a symbol of Germany’s economic miracle, above all as a result of the strong export orientation on the part of the company converted into a joint stock corporation in 1960. Innovative and flexible manufacturing systems made an appearance in the 1970s and led to the birth of a new generation of Volkswagens with the Passat, Scirocco, Golf and Polo models. Growth was boosted in the 1980s through advances in vehicle technology, flexible production, and forward-looking international cooperation.
As its globalization advances, Volkswagen is emerging as one of the world’s most successful volume car manufacturers, and today offers cutting-edge solutions for future issues such as e-mobility and digitalization.
Our goals are high and our strategy is very ambitious. We want to benefit from change and to take Volkswagen into the lead in the new automobile industry with determination. Over the next few years, Volkswagen will change radically. Very few things will stay as they are. In the final resort, the new strategy is a major transformation program.
Transformation in three phases.
The reorientation of the Volkswagen brand is to take place in three phases. In phase 1, up to 2020, we will be entirely restructuring our core business and completing a transformation along the entire value stream. At the same time, we will develop new competences. In Phase 2, up to 2025, we intend to take the lead in e-mobility on the basis of our regained strength as a leading, profitable volume manufacturer. Our strategy in this phase aims to create a broader earnings base, for example through new mobility services. At Volkswagen we also intend to play a key role in shaping the major transformation in the industry expected after 2025. The objective is to achieve a leading role in the new world of mobility by 2030.
Volkswagen aims for global "top of volume" position.
A key element of our new strategy is positioning at the top end of the volume segment, near to the premium competitors. To date, Volkswagen has only achieved its objective of becoming "top of volume" in China and Europe. In future, we aim to achieve this position throughout the world through a realignment of product strategy – with an SUV offensive in the first stage and the electrification wave in the second stage. A further element of our new strategy is a uniform global brand system with a new design concept.
In future, e-mobility will be part of our Volkswagen brand core. From 2020, we will be launching our major e-mobility offensive. As a volume manufacturer, we intend to play a key role in the breakthrough of the electric car. We are not aiming for niche products but for the heart of the automobile market. By 2025, we want to sell a million electric cars per year and to be the world market leader in e-mobility. Our future electric cars will be the new trademark of Volkswagen.
We finance our e-mobility offensive by a number of measures including the discontinuation of certain low-volume, low-earnings conventional models and model variants. This will release funds in excess of €2.5 billion for e-mobility.
A leading role in connectivity.
Our brand Volkswagen will develop its own digital platform. By adopting this approach, we will be moving closer to our customers on the one hand and developing new earnings potential with a comprehensive range of services on the other hand. By 2025, we expect to have about 80 million active users throughout the world. This would mean that we would have the leading digital ecosystem in the entire automotive industry. Volkswagen estimates that its sales revenue from services related to networked vehicles will reach about €1 billion per year by 2025 and expects a significant contribution to earnings from this business area.
Turnaround for the regions.
In North America, we intend to evolve from a niche supplier into a relevant and profitable volume producer. We will be significantly stepping up our activities in the USA. The main focus will be on the key segments in the country, large SUVs and limousines. In those segments, we will be strongly expanding our range. In a second stage, we will then take our new electric cars to North America. Over the next few years, we will be making considerable investments in electric infrastructure. Local production of MEB vehicles is to start from 2021.
In China, we intend to strengthen the "top of volume" position we have already reached. This will be achieved by an SUV offensive and by rapidly launching electric vehicles. In China, we also aim to benefit from the potential in the strongly growing economy segment. We have already started work on the development of appropriate models. In other major markets such as India, South America and Russia, we also intend to develop the economy segment.
Transformation of corporate culture and organization.
Our strategic offensive is to be supported by a comprehensive organizational reform. The reorganization will aim for agility, a stronger entrepreneurial spirit, a more transparent discussion culture, flatter hierarchies and more flexible working models. This we will back by a new corporate mission – with specific goals as regards earnings power, sustainability and attractiveness as an employer– as well as a new leadership model and a broad-based integrity campaign.
Profitable growth through higher sales revenue and lower costs.
We expect a significant increase in sales revenue over the next 10 years as a result of the consistent implementation of the TRANSFORM 2025+ program. At the same time, the profitability of the brand is to improve considerably. The operating margin is to double from about 2 percent in 2015 to 4 percent by 2020, with a further increase to 6 percent by 2025. Further improvements are aimed for after 2025.
A key step towards profitability safeguarding the future of the brand will be the pact for the future presented on 18 November. Specifically, the pact for the future is to have a positive impact on earnings of €3.7 billion per year by 2020, with the German facilities accounting for €3.0 billion.
Over the next few years, we will keep our investments stable at about €4.5 billion. Together with improved operating earnings power, this will result in significant positive net cash flow in the medium term.