In the first year of the ACCELERATE strategy, the Volkswagen brand made good progress in its transformation into a technology company. In 2021, Volkswagen will reach several important milestones in the areas of electrification, digitalization and new business models. At the same time, the company continued to improve efficiency in a challenging competitive environment: even as sales volumes declined, sales revenue, return on sales sales and operating profit from the previous fiscal year improved significantly.
"2021 is an extraordinary year. In an extremely difficult business environment, we have continued to improve efficiency while maintaining the established route in terms of operations. Compared to last year, our profitability, resilience and efficiency have improved significantly. At the same time, based on the ACCELERATE strategy, we have once again accelerated the pace of our transformation to technology companies. Mr. Ralf Brandsttter, CEO of Volkswagen Passenger Car, said, "In 2022, we will continue to promote our own transformation and enhance brand resilience. While it is currently impossible to predict the direction of the situation in Ukraine and its impact on supply chains and the global economy, we have laid a solid foundation in 2021 and have sufficient risk response capabilities. ”
Optimized cost structure, strict expenditure management, excellent product matrix
In 2021, Volkswagen delivered a total of 4.9 million vehicles (2020: 5.3 million units), down 8% year-on-year. Despite this, Volkswagen's sales revenue increased by 7% year-on-year to EUR 76.1 billion (2020: EUR 71.1 billion). Operating profit, excluding expenditure on special projects, amounted to EUR 2.5 billion, an increase of EUR 2 billion over the previous year (2020: almost EUR 500 million). In 2021, the return on operating sales excluding special project expenses was 3.3% (2020: 0.6%), meeting the previously set target range of 3% to 4%.
Thanks to strict spend management, Volkswagen exceeded its fixed cost target for 2021, reducing it by around €1 billion compared to pre-pandemic 2019. At the same time, Volkswagen's continued investment is an important issue for future development: about half of the investment or expenditure related to research and development is in the field of electric mobility. By 2026, the Volkswagen brand will invest 18 billion euros in the areas of electric mobility, hybrid and digitalization.
The North and South American markets are once again sustainablely profitable
Mr. Alexander Seitz, CFO of the Volkswagen passenger car brand, said: "By focusing on investing in future projects and optimizing the fixed cost structure, we continue to drive Volkswagen's transformation; through attractive products and excellent product portfolios, we have achieved a significant improvement in the quality of profitability. Coupled with the turnaround in the North and South American markets, we further strengthened the resilience of the Volkswagen brand in 2021. ”
In 2021, sales revenue and profit in the two markets of North and South America were significantly higher than in the previous year, and it was profitable again after many years. "In North and South America, we are constantly optimizing our product lineup according to local market needs, reducing fixed costs and adjusting local production. Both markets now have sustainable profitability and strong plans in place to further improve their competitiveness in the coming years. Ralf Brandst tter said.
An important milestone in electrification and digital transformation
Since the implementation of the ACCELERATE strategy last year, the Volkswagen brand has not only strengthened its competitiveness, but also accelerated the process of electrification and digitalization.
In order to better meet the rapidly growing market demand, Volkswagen is systematically expanding its production capacity. Following the transformation of the Zwickau plant into a plant specializing in electric vehicles, three plants in Emden, Hanover and Chattanooga in the United States will also start producing electric vehicles in 2022.
Volkswagen has also reached an important milestone in digitalization: in 2021, we will become the first mass-produced car manufacturer to offer OTA remote wireless upgrade services. In total, we have achieved more than 100,000 upgrades on our ID. family models in Europe. This year, Volkswagen will also gradually roll out OTA remote wireless upgrades in markets such as China and the United States. This is also the premise that Volkswagen can bring services such as "on-demand ordering" to more users around the world.
Based on the brand new ID. With version 3.1 of the software, Volkswagen is improving the car experience for users of all ID. family models. THE ID.5 and ID. Buzz models will be delivered with a new version of the software, and we will gradually push the new version of the software to all ID.family models to achieve shorter charging time, improved driving comfort and optimized operation.
Wolfsburg became a trailblazer in development and accelerated
Based on the ACCELERATE strategy, Volkswagen continues to promote the renovation of its main plant in Wolfsburg. The plant will start production of the first pure electric model, ID.36, in 2023 and the second electric model, the Trinity 7, in 2026. The model has significantly reduced charging times, a range of more than 700 km, and is equipped with the Volkswagen Group's most advanced software, which technically supports L4 autonomous driving, and is based on a new SSP platform developed by Volkswagen for the Group in Wolfsburg.
Volkswagen plans to invest 2 billion euros in a dedicated production facility near the main plant, in addition to an additional 800 million euros in the construction of a new research and development center: the Sandkamp campus. In the future, the development of a new SSP electric platform and the production of Trinity models will be carried out here, with the aim of significantly accelerating the speed of R&D and production and setting new benchmarks. Our goal is to shorten the vehicle development cycle by 25% from 54 months to 40 months.
Outlook 2022: Further increase in sales revenue, revenue and EV deliveries
Volkswagen plans to significantly increase the delivery of all-electric vehicles this fiscal year. Chip supply is expected to improve in the second half of this year at the latest, which will help Volkswagen achieve this goal. In addition, operating profit, sales revenue and operating return on sales are expected to increase in 2022. "We aim to achieve a 6% return on operating sales by 2023 and set the next steps towards that goal by 2022." Alexander Seitz said.
However, this expectation will depend on how the situation in Ukraine develops further and its impact on the Volkswagen Group's supply chain and the global economy. At the same time, the latest developments in the situation in Ukraine may adversely affect the business of volkswagen's passenger car brand.
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