Volkswagen Group wants to give its operation a top-to-bottom shakeup, which means ditching the bureaucratic, centralized ways of the past and positioning itself as a lean, nimble player in a rapidly evolving marketplace.
Oh, and there will be tons of electric vehicles. Piles and piles of them.
In its announcement of the TOGETHER – Strategy 2025 plan, the automaker came off sounding more like a tech startup, touting a newfound “entrepreneurial mindset and approach” that will bring the company out of the long shadow of the emissions scandal.
Efficiency is top of mind in the plan, with streamlining across the board — including on the assembly line, where modular platforms will be massaged for every last bit of usefulness. The early details we reported on yesterday, including a portfolio review, potential asset sale, and consolidation of component units, are also part of the plan.
Moving forward, Volkswagen wants its truck and bus division (Scania, MAN and Volkswagen Commercial Vehicles) to be a bigger moneymaker for the group. It wants those vehicles to have the biggest presence in the global market, too.
A new mobility solutions business unit, which no automaker (it seems) can be without, aims to turn a profit in the billions of dollars by 2025.
In terms of products, the company said it will position its model lineup “to focus on the most attractive and fastest-growing market segments,” meaning SUVs, crossovers, and plenty of electric vehicles. In the next 10 years, Volkswagen plans to introduce “over 30” battery electric vehicles, with projected sales of two to three million EVs by the end of the period.
In other words, the automaker plans to dominate the EV market, even though the future of the market — and its eventual size — is hard to judge.
On the corporate front, Volkswagen plans to be extra stingy with its cash. The ratio of research and development costs to sales revenue will drop to six percent, while selling and administration costs will reverse course and drop below 12 percent of revenue.
The company is crossing its fingers and hoping these moves (literally) pay off. It’s aiming for an operating return on sales of somewhere between seven and eight percent, up from six percent last year.
That is, if they’re still around in 2025.
The VW group, even with all their current troubles, is far from completely collapsing.
Understatement of the Century. 100,000 vehicles shy of Toyota who are Number 1.
“Moving forward, Volkswagen wants its truck and bus division (Scania, MAN and Volkswagen Commercial Vehicles) To be a bigger moneymaker for the group”
They want the Trucks to expand into NA, the target being Paccar as an acquisition. Scania/MAN, like Ducati are not ” Volkswagen “. VW has major shareholding, that is all
The planners who are cutting costs in order to get more done will have all retired by 2025, so they don’t really care if it works or not.
They’re going to develop “SUVs, crossovers, and plenty of electric vehicles”, while simultaneously reducing the ratio of research and development costs to sales revenue to 6%?
I like the rhetoric, but doubt its grasp on reality.
Well some of those SUVs/CUVs were in the pipeline before the scandal (i.e. CrossBlue) and the VW group will of course be sharing platforms/development with their cars and other SUVs/CUVs. Things like making additional Alltrack models don’t require that much R&D costs.
Big companies want to be like start-ups but only enough to convince the shareholders that they’re serious.
Senior managers wont work 12-14 hour days 6 days/wk for 50% of their old salary in exchange for equity, as they would do in a start-up.
They’re not going to give up comfy office couches and offices with a door and cut the fat of middle managers, as they would do in a start-up.
Heck, even a start up would focus on the fundamentals. Electric cars are not a money making proposition, the barriers to entry are too low – heck, the first ‘successful’ new car company in 50-70 years competes exclusively in electric cars. Do you really want to focus your resources on the side of the industry that can be entered?
Stupid.
“the barriers to entry are too low”
Try telling that to Tesla.
You’ll have to tell me what you mean by this.
The barriers/simplicity to/of making an electric vehicle are so much lower than an ICE vehicle it’s not even funny. Look, the last major car manufacturer to start was either Honda or Hyundai in the 50s/60s. Every other car company can trade its roots back at least 100 years or so.
Tesla could become a major player in the next 10 years and there’s no way that would have been possible if they tried to make ICE vehicles like everyone else.
We’re in a golden age of material science and additive manufacturing is going to rock the world. Those two technologies are going to make it much easier to become a car company.
In other VW related news, the Judge has extended their next court date to June 28 at the request of the “Settlement Master”, Robert Mueller.
So VW is getting another week to make TDI owners dislike them even more. It better be an impressive buyback number.
Ditto. I had the date memorized and then it extended a week. It was not VW who requested the extension, though.
I’m still kind of shocked nobody has cashed into the opportunity Tesla has opened up. Contrary to focus group studies there are still large swaths of the market that want cars that entice and excite them. I think the biggest reason the Model S is such a huge success is because it’s an expensive car that doesn’t come off as something built to an ancient idea of luxury. I bet the average age of an S-Class buyer is like 68 whereas Tesla buyers are probably in their early 40s. At least it LOOKS that way.
As an ex-employee of a large German company, all I can say is that the bureaucratic force is strong there. Reducing bureaucracy is achieved by pushing if off to someone else, then claiming victory. Getting rid of cancer is easier than these companies getting rid of bureaucracy.
its announcement of the (Let’s Get Our $h!t) TOGETHER – Strategy 2025 plan..
The left side of that picture is more desirable and where I live in California I see quite a few every day.
Model S is immediately recognizable and is a status symbol while S class is lost in crowd car for people who feel old, so 20th century. Sometimes I see Mercedes from behind in traffic and think it is C-class or CLA and get shocked after seeing S-class badge on the trunk – it looks small and forgettable. Model S is slick and modern in comparison – simple, easily updatable to a new version, without all that useless crap S class is loaded with – it is a future. Passat? Forget about – car for losers. I highly doubt that green crown will go for VW any time in forseeable future esp after associating it with ancient Passat and old tech like Diesels.