The Volkswagen Group is advancing its NEW AUTO strategy to lay a solid foundation for business progress in 2022

On March 15, volkswagen group last year vigorously promoted the NEW AUTO strategy, laying a solid foundation for future profitable growth and successfully improving the resilience of the group's business model in a difficult environment. In 2021, the Volkswagen Group will usher in a favorable turning point in its business in key global markets, successfully advancing its e-mobility strategy, strengthening its software development capabilities and improving efficiency.

Speaking at the group's annual earnings conference in Wolfsburg, Volkswagen CEO Herbert Diess said: "The sudden outbreak of war has brought about a lot of economic and social turmoil, which we thought for many years of multilateralism and diplomacy had allowed us to avoid. The Volkswagen Group has proven itself resilient over the past few years and will work hard to cope with this crisis. At the same time, we will continue to focus on the implementation of the NEW AUTO strategy towards a future of zero emissions and autonomous driving. ”

Strong regional market performance: The North and South American markets have successfully turned the tide and are leading the Chinese market

In 2021, the Volkswagen Group has made great strides in all markets around the world thanks to its global presence, localization strategy and optimized product portfolio.

In North America, the Volkswagen brand resumed profitability in three markets: Canada, the United States and Mexico. Five new SUV models, including the all-electric ID.4, are in high demand, with cumulative sales accounting for more than 75% (375,030 units) of the Group's total sales in the U.S. market. Upcoming pure electric ID. Buzz1 will be the key to building emotional resonance between the Group and consumers in the U.S. market.

The Volkswagen brand has also successfully turned things around in South America. The Group has continuously launched Taos, Nivus and other models in a customer-oriented manner, laying a solid foundation for achieving profitability and positive cash flow.

In Europe, the Volkswagen Group is a pioneer in the introduction of electrification, and the industry's largest electrification offensive has begun to pay off in the early stages, and the Group's investment has begun to pay off. In 2021, the Group leads the European market, with one in every four electric vehicles coming from the Volkswagen Group. Preliminary data shows that the Group has exceeded its VEHICLE CO2 emission targets for the European Union, which includes Norway and Iceland.

In China, the world's most important growth market, the Volkswagen Group has always maintained excellent profit margins and market leadership. The group has a 16% market share in China, nearly double that of its second-largest competitor. The Volkswagen brand, the most successful brand, has an 11% market share, and Porsche, Bentley and Lamborghini have all set new sales records. In 2021, the shortage of chip supply caused the Group to be unable to meet the high demand of the market, and overall sales were affected.

Successful electrification offensive: Pure electric vehicle sales ranked first in europe and second in the US market, and sales in the Chinese market increased by more than 4 times in 2020

In 2021, the Volkswagen Group further accelerated its electrification offensive, delivering a total of 450,000 pure electric vehicles, an increase of nearly double. In the field of pure electric vehicles, the Group's sales volume ranks first in the European market and second in the United States market. In both markets, the Group's share of the pure electric vehicle segment is higher than its share in the overall automotive market. Last year, the Group delivered a total of 93,000 pure electric vehicles in the Chinese market, more than 4 times that of 2020. The Group has also launched new sales methods for young consumers, 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.

The Volkswagen brand released its classic ID last week. Buzz's new model will inject new impetus into the electrification offensive. This pure electric model will also be applied to future autonomous mobility concepts such as carpooling.

Solid financial performance: Further enhance business model resilience

Volkswagen has announced the Group's financial data for 2021, as well as its outlook for 2022. The annual report released today provides detailed data on the performance of the Group's brands and regions.

Despite a 6% year-on-year decrease in overall sales, sales revenue increased by 12 percent to EUR 250.2 billion. Operating profit, excluding expenditure on special projects, nearly doubled from the previous year to €20 billion. Return on operating sales, excluding special project expenses, increased to 8 percent from 4.8 percent in the previous fiscal year. A richer product portfolio and pricing advantages, as well as reduced indirect costs, are key factors in achieving superior financial performance.

Capital expenditure discipline, strict control of working capital and the positive contribution of the Group's operating businesses contributed to the net cash flow of the automotive business to EUR 15.5 billion, an increase of EUR 5.5 billion over the previous fiscal year. At the end of 2021, net liquidity was EUR 26.7 billion.

Last year, Volkswagen launched an indirect cost management project to improve its competitiveness and provide financial support for the Group's full electrification and digital transformation. The Group achieved ahead of schedule its target of cutting indirect costs (excluding R&D and capital expenditures) by 2023. Compared to 2019, the Group saved 4 billion euros in costs.

Mr. Arno Antlitz, Chief Financial Officer of volkswagen group, said: "Despite the severe impact of chip shortages, in 2021, the Volkswagen Group still improved the soundness of the overall business, achieving strong performance and stable cash flow. In the North and South American markets, the Volkswagen brand has ushered in an important turning point, and our high-end brands and financial services have made a significant contribution. This gives us the confidence that we will be able to provide strong financial support for the NEW AUTO transformation even in difficult times." ”

NEW AUTO: Significant progress has been made on the four major platforms

The Volkswagen Group announced its NEW AUTO strategy in July last year, which aims to create future profit sources through four global core technologies with cutting-edge technologies and strong scale effects. In 2021, the Group made significant progress in all areas.

Speaking at the launch of the group's annual earnings report, Volkswagen Group CEO Herbert Diess said: "Last July, we announced our NEW AUTO strategy: by 2030 the Group will transform itself into a sustainable provider of software-driven mobility services. In less than a year, we have achieved significant milestones in all four strategic areas. We are steadily creating new profit sources for the future and will do our best to shape the future of mobility. ”

In terms of mechatronic platforms, the current MEB platform is gradually becoming the industry standard for electric mobility. The Group will expand its cooperation with Ford to produce a second all-electric model based on the MEB platform, and production of Ford's MEB models will double to 1.2 million units over the next six years.

The Group has made a major decision at its headquarters in Wolfsburg to invest 2 billion euros to build a new process-optimized plant next to the main plant in Wolfsburg to produce trinity, the first Volkswagen brand model based on the SSP (Scalable System Platform). The plant will adopt leading innovative production methods and achieve net zero CO2 emissions, which will be an example of the gradual transformation of production at the main plant in Wolfsburg and all other Volkswagen plants.

In addition, the Group will invest 800 million euros in the construction of an R&D center focused on the development of the SSP platform. In the future, the SSP platform will be the Group's only production platform for the production of pure electric vehicles and the realization of autonomous driving functions.

With the addition of new members to the CARIAD management team, the Group's software strength has been further strengthened. CARIAD will focus more on driving the next phase of the company's development through organic growth and mergers and acquisitions. CARIAD has successfully integrated Hella's camera software business and partnered with Bosch to develop L3-level autonomous driving technology. In 2022, CARIAD will enter the U.S. and Chinese markets, enabling the Volkswagen Group to customize software development according to the different needs of various markets around the world, further accelerating the pace of development.

Consumers are now able to experience the software solutions that CARIAD brings. The Group has been applying CARIAD remote online updates and other new features to vehicles since last fall, and has now completed more than 56,000 remote online updates. The Group will undergo an important software update in 2022, including the launch of the new Full Journey Driver Assistance System 2.5, plug-and-play functionality, multi-point route planning and upgraded voice control. Through the partnership with Mobileye, the Group's full-journey driver assistance system technology is already leading the European market and will be further enhanced.

CARIAD will launch version 2.0 of the unified software platform in 2025, covering all Brands of the Volkswagen Group. The Group has successfully developed variable minimization products for the platform. This is the first time the Group has completed testing of the underlying software architecture four years before it goes into production, a new approach to software-centric vehicle development.

Focusing on batteries and charging, charging is a key factor in enabling electric mobility, and the Volkswagen Group is building a charging network covering Europe, the United States and China.

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.

Building a leading mobility platform is another important cornerstone of NEW AUTO's strategy. 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. ID.Buzz has already begun using ARGO AI's software for road tests of autonomous driving functions in Munich, with tests in the United States set to start in 2023. The Group's goal is to launch a commercial autonomous ride-sharing service in Hamburg, Germany, in 2025.