VW Group's outlook for fiscal 2022: Focus on the "new four modernizations" of automobiles and continue to implement NEW AUTO

On March 15, 2022, the Volkswagen Group's 2022 annual media conference was held in Wolfsburg, Germany. At the meeting, Herbert Diess, CEO of Volkswagen Group, launched a series of discussions on the group's profit and loss in fiscal 2021 and the impact of the recent Russian-Ukrainian conflict on the group, and at the same time, volkswagen group also announced the general plan for 2022 and the future. In order to facilitate everyone's understanding, we have sorted out the key information of this media communication meeting.

1. Chip supply shortage problem still exists Volkswagen Group has found a strategy to deal with it

As we all know, in the past two years, chips have been the focus of common concern in the industry. However, as the semiconductor industry is mired in a manufacturing crisis, it has now evolved into a global shortage of chip supply. It was also affected by this that the overall sales volume of the Volkswagen Group in fiscal 2021 decreased by 2.4 million units compared to fiscal 2019.

However, the blocked sales do not mean that revenue is poor. According to Arno Antlitz, chief financial officer of Volkswagen Group, in fiscal 2021, the group's auto sales revenue increased by 12% year-on-year, sales reached nearly 250.2 billion euros (about 1.74 trillion yuan), and the operating profit that was not included in special project expenses also reached 20 billion euros (about 139.63 billion yuan), and the return on operating sales was as high as 8%, nearly doubled compared with last year.

As for why this was achieved, Arno Antlitz only downplayed that in the past two years, the Volkswagen Group has learned how to better respond to and mitigate the impact of the crisis on the group, and these valuable experiences have convinced him that the company has always maintained its course in difficult times.

In this regard, he explained, "In 2021, we will improve the soundness of the Group's overall business by achieving higher profit margins, reducing indirect costs and breakeven points, and complying with capital expenditure discipline. We have achieved strong performance and stable cash flow. At the same time, we remain committed to investing in the future and accelerating our transformation into a sustainable provider of software-driven mobility services. ”

2. NEW AUTO remains the core strategy In 2022, significant investment will be made in software development and autonomous driving technology

In July 2021, the Volkswagen Group officially unveiled the 2030 NEW AUTO strategy. The strategy states that by 2030, Volkswagen Group software-related sales are expected to reach 1.2 trillion euros. At the meeting, Volkswagen said it would continue to make every effort to transform into the core strategic goals of NEW AUTO and strive to become a sustainable provider of software-driven mobility services.

To this end, the Group will invest heavily in software development and autonomous driving technology, continue to enhance its own strength, and continue to enrich the product portfolio of pure electric vehicles. The lucrative profits of the fuel vehicle business will generate strong cash flow for the transformation of NEW AUTO's core strategic objectives, and to date the Volkswagen Group has earmarked 73 billion euros for the period between 2021 and 2025 to invest in future technologies, which account for about 50% of the total investment.

Currently, carIAD (Car. I Am Digital) has successfully integrated Hella's camera software business and is working with Bosch to develop L3-level autonomous driving technology. At the same time, the Volkswagen Group will also carry out an important software update in 2022, including the launch of the new full-journey driver assistance system 2.5, plug-and-play function, multi-point route planning and upgraded voice control function.

In fact, European consumers have experienced the convenience of CARIAD software solutions, and according to Volkswagen Group CEO Herbert Dies, in 2022, CARIAD will also officially enter the United States and the Chinese market, enabling Volkswagen Group to customize software development according to the different needs of various markets around the world, which is undoubtedly a major benefit for ordinary consumers.

3. The offensive effect of electric vehicles is remarkable Sales in the Chinese market have increased by more than 4 times in 2020

In 2021, the Volkswagen Group launched a number of excellent electric vehicle products, such as ID.3, ID.4, ID.6, Audi Q5 e-tron, etc. Under this offensive, the Volkswagen Group delivered a total of 450,000 pure electric vehicles in the global market, an increase of nearly double that of fiscal year 2020, which also made the Group's sales volume in the field of electric vehicles rank first in the European market and second in the United States.

As one of the world's largest electric vehicle markets, Volkswagen Group delivered a total of 93,000 pure electric vehicles in the Chinese market last year, although this figure is not eye-catching compared to many Local Chinese companies, but compared with 2020, sales growth has exceeded 4 times. At the same time, for China's young consumer groups, Volkswagen Group has also launched a new sales method, including the opening of 120 city showrooms in domestic shopping malls, laying the foundation for the Group to achieve the annual goal of more than doubling sales in the world's largest single market.

Just last week, the Volkswagen brand just released a replica of the classic ID.Buzz model, which adopts a van-like shape, which looks very technological and at the same time very cute. According to reports, the wide space will be a major advantage of the car, and it is expected to be applied to the future autonomous driving mobility concept such as carpooling in the future, injecting new impetus into the group's electrification offensive.

In addition, volkswagen group's MEB platform is also moving towards becoming the industry standard for electric mobility. At present, Volkswagen is expanding its cooperation with Ford. Based on the previous cooperation agreement, Ford will launch its second MEB pure electric model after the Mustang Mach-E in 2023. Over the next six years, production of Ford's MEB models will double to 1.2 million.

4. Focus on batteries and charging Volkswagen Group is building a charging network covering Europe, the United States and China

In Volkswagen's view, in the next 10 years, the fuel vehicle market will shrink by more than 20%. At the same time, the pure electric vehicle market is bound to grow rapidly and replace fuel vehicles to dominate the market. To this end, the Volkswagen Group will continue to focus on batteries and charging businesses, and build a large charging network covering Europe, the United States and China.

According to the plan, the Volkswagen Group plans to build 45,000 high-power charging terminals worldwide by 2025. At present, about 10,000 charging terminals have been put into use, and more facilities will be put into operation this year. In Europe, the Group has formed a joint venture with The Italian National Electricity Company and is working with BP to launch the first high-power charging facilities. In China, the Group's joint venture, Chemies, has grown rapidly. In the United States, the group has developed a new expansion plan with Electrify America, which aims to build 10,000 high-power charging terminals by 2025.

In addition, the establishment of a leading mobility platform is another important cornerstone of NEW AUTO's strategy. The Group's goal is to launch a commercial autonomous ride-sharing service in Hamburg, Germany, in 2025. Last year, the Acquisition of Europcar by the Volkswagen Group and its partners was an important step to promote the Group's rapid development in this field. The transaction is expected to close in the second quarter of 2022. Autonomous vehicle fleets will also become part of the mobility service portfolio, with the new ID. Buzz will play an important role.

5. Market environment will remain challenging Fiscal 2022 is fraught with uncertainties

In the face of 2022, Volkswagen said that the market environment will remain challenging.

First of all. Volkswagen Group expects the structural shortage of chips to have a lasting impact, but compared with the first half of the year, chip supply is expected to improve in the second half of 2022. On the other hand, whether the COVID-19 epidemic can be stabilized is also a major factor affecting the market, if there is no more large-scale outbreak in 2022 and the gap between intermediate products and commodities is alleviated, then the Volkswagen Group expects that in 2022, vehicle deliveries will increase by 5% to 10% year-on-year, sales revenue will increase by 8% to 13% year-on-year, operating sales return is expected to be between 7% and 8.5%, and return on investment is expected to be between 12% and 15%.

It is worth noting that the actual performance of the Group's business will depend on how the situation in Ukraine develops further, in particular its impact on the global economy and the Group's supply chain.

Volkswagen said the latest developments in the situation in Ukraine could adversely affect the Volkswagen Group's business and could even lead to supply chain bottlenecks. At this stage, given the future development of the event and the uncertainty and unpredictability of the related impact, the Group is not yet in a position to make a definitive assessment of the extent to which it will be impacting global economic and industry growth in FY2022. Therefore, the above data and analysis are for your reference only, and finally, I hope that this article will be helpful to you.