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Volkswagen Group to Realign with Multi Billion Dollar Investment

A major state of the union address came out of Wolfsburg today, with CEO Matthias Muller outlining the future direction of the Volkswagen Group. The plan, named “TOGETHER—Strategy 2025,” involves changes to the group that are wide ranging and profound.

“‘TOGETHER – Strategy 2025′ will make the Volkswagen Group more focused, efficient, innovative, customer-driven and sustainable – and systematically geared to generating profitable growth,” says Muller. “We aim to create lasting value for all our stakeholders.

The nuts and bolts of these changes will be laid out by the company before the end of the year, they say, but today they announced that the new direction will lead the group to produce many more electric cars, focus more heavily on ride hailing, and to make more commercial vehicles in more markets.

Volkswagen Pressekonferenz auf der Auto China 2016 in Peking

Pursuing these goals will require an enormous investment in research and development, that Volkswagen predicts will be in the double-digit billion dollar range.

To fund this, Muller says the group will be increasing efficiency across the brands. Volkswagen say that every brand, and every department, especially for the Volkswagen brand, will need to increase operational efficiency, meaning, effectively, an operating return on sales of 7-8% by 2025.

One of the ways the Volkswagen Group proposes to do this is by streamlining its modular architecture. Precisely what that means remains to be seen, but given that they want to “reduce complexity in development and production,” it sounds like they want to make the platforms even less different from vehicle to vehicle, and maybe have even fewer platforms.

Reports also surfaced recently that the group is weighing its assets with the possibility of selling companies like MAN and Ducati to help with cash flow. On the other hand, they announced today that commercial vehicles would be an important part of the Groups future, and that they would be looking to sell more commercial vehicles in more markets by 2025.

In the long term, Volkswagen is looking to becoming more involved in both electric cars and “mobility services.” While the Group say that they will continue to produce traditional vehicles, they also want to sell 2-3 million Battery Electric Vehicles (BEV) by 2025, which would amount to 20-25% of overall sales at that time.

This adds credibility to recent reports from Automotive News that the group is considering building an $11 billion battery cell plant.

Ride Hailing is also a big part of the Group’s future direction. It doesn’t end with the recent $300 million investment Gett. Volkswagen have revealed that they are also focused on other services like robotaxis (and other driverless technologies), car sharing, and transport on-demand.

Skoda_Vision_S_Geneva_2016_Front-View

The good news for North America is that Volkswagen says they are still committed to the market. Just what that commitment will look like remains to be seen, though.

With the Volkswagen brand’s particular trouble in North America, even before the diesel crisis, the future is unclear. Skoda was recently found to be trademarking the names of its products in North America, and with that speculation arose that it might be making inroads into the market, even that it might replacing Volkswagen, though the latter claim could be termed “wild” speculation.

Gett, too, though its was recently introduced in New York, has struggled to get a foothold in North America. As a result, the future of Volkswagen’s on-demand mobility plan for North America remains obscure.

The group just opened a parts distribution center in California, and just announced another $4.5 million investment in a new Southern California Training Center. In their announcement today, though, Volkswagen said that they would be realigning the components business to combine their activities across all brands, so changes are still coming.

Whatever the future for North America, Volkswagen and Muller at least appear to have a clear vision for Europe. With heavy investment in technology, rather than empire building, Volkswagen is looking to embrace what it sees as the future.

The post Volkswagen Group to Realign with Multi Billion Dollar Investment appeared first on VWVortex.



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