After the Volkswagen Group held the 2022 annual media conference, its major sub-brands also held separate annual media meetings, the first to appear was the Volkswagen brand.
As the basic brand of the Volkswagen Group and the largest brand. In 2021, Volkswagen sold 4.9 million new vehicles worldwide, down 8% year-on-year, but still accounting for 55% of the group's total sales.
Volkswagen did not directly announce sales in the Chinese market, but mentioned that the global delivery volume excluding the Chinese market was 270 units. Based on this speculation, the global share of the Chinese market is close to 50%. The Chinese market is becoming increasingly critical for Volkswagen and the Volkswagen Group.
Although sales volumes have declined, data related to the quality of operations, such as revenue and profit, have improved significantly. In 2021, Volkswagen sales revenue rose by 5 billion euros to 76 billion euros, excluding operating profit in the Chinese market surging by 451% to 2.5 billion euros, and the return on operating sales increased from 0.6% to 3.3%.
Volkswagen's operating margin can achieve a change from a near loss to a significant recovery within a year, thanks to its strong ability to adjust.
In the face of supply chain pressures, Volkswagen has been able to ensure a profit margin improvement in the face of declining sales by allocating scarce chips to more profitable models; the north and South American markets have been profitable again after many years, and the move to reduce fixed costs by 1 billion euros since 2019 has also contributed to the significant recovery in operating margins.
Volkswagen Passenger Car Brand CEO Berryd told the media: "Compared with the previous year, our profitability, risk resistance and efficiency have improved significantly," he added, "Volkswagen has significantly improved its resilience." ”
Volkswagen maintained its goal of increasing its operating margin to 6% by 2023, based on the steady improvement in the quality of its operations and the continued large market demand, as well as the steady progress of the ACCELERATE transformation strategy.
The ACCELERATE strategy is Volkswagen's transformation strategy released early last year, which emphasizes that Volkswagen will focus on technologies and industries such as electrification, digitalization, and autonomous driving in the future. The strategy will help Volkswagen transition from a traditional automaker to a software-defined tech company.
Over the past year, the ACCELERATE strategy has been very effective.
The ACCELERATE strategy has worked significantly
Volkswagen's strict spending management guidelines have brought its fixed costs to a historic low in 2021 and its outbound investment to a record low since 2008/2009. These savings are all used for R&D investment required for e-mobility – with a R&D spending ratio of 4.1% in 2021.
The ACCELERATE strategy points to factory transformation, electrification of the product lineup and the digitalization process. At Volkswagen, about half of the investment is spent on the electrification of products and the transformation of factories.
In 2021, Volkswagen unveiled three new electric vehicles – id.4, ID.5 and its high-performance GTX version, as well as ID.6, built specifically for the Chinese market. These pure electric products based on specialized platforms have achieved initial success in the market, although there are still many shortcomings.
Globally, Volkswagen delivered 369,000 new energy vehicles to subscribers in 2021, an increase of 73% over the previous year. Among them, the sales of pure electric models almost doubled compared with the previous year, reaching 263,000 units.
Specific to local markets, Volkswagen said that its electric vehicles are "gradually becoming market leaders" in Europe, such as in Germany, where 1 in every 5 pure electric vehicles is Volkswagen.
In the U.S., Volkswagen ranks 4th in the electric market, saying that "two-thirds of users are buying Volkswagen for the first time."
In the most critical Chinese market, Volkswagen said that "the shortage of chip supply has slowed our growth rate, and we could have sold more pure electric vehicles." In 2021, Volkswagen's sales of pure electric vehicles in China reached 77,000, more than four times the sales of the previous year.
Although Volkswagen's market share in electric vehicles is still a little immature compared to its fuel vehicles at this stage, it has at least begun to move in the right direction. With the continuous advancement of the ACCELERATE strategy, Volkswagen's position in the electric vehicle market is bound to make great progress.
Strengthen the electric vehicle offensive
Volkswagen has a long-term goal for electrification, and by the end of this decade, Volkswagen's pure electric models will account for more than 70% of sales in the European market and more than 50% in North America and China. And to achieve that goal, the product is key.
By 2026, Volkswagen will launch at least one new all-electric model per year, focusing on the value, quality and innovation of the vehicle, According to Braid. There are a lot of new cars coming out this year.
Last week, ID.Buzz made its world debut in Hamburg, and as the most affectionate member of the ID. family to date, ID.Buzz caused a sensation after its release. Herbert Diess, CEO of Volkswagen Group, said that when ID.Buzz appear in the United States, passing audiences will immediately pull out their mobile phones to take pictures after seeing it, saying that ID.Buzz is the key for Mass brands to re-establish emotional resonance with consumers in the Us market.
This makes the market prospects of the ID.Buzz full of imagination, and Volkswagen hopes to sell the car 120,000 units a year.
A few weeks later, Volkswagen's first pure electric SUV coupe model, the ID.5, will be available soon. It will also be the first model to be equipped with the new ID.3.1 version of the software at the time of delivery.
The new software shortens charging time, improves comfort and optimizes operation. It also offers improved voice control and customizable multi-way point route planning. Volkswagen said the new software will lead in terms of stability and new features.
For example, the Travel Assist full-speed domain driver assistance system based on group data can achieve partially automated lane change functions on highways.
This version of the new software will then be progressively rolled out to all ID. family model users. To date, Volkswagen has achieved more than 100,000 OTA wireless upgrades on its ID. family vehicles in Europe. "This year, Volkswagen will gradually roll out OTA remote wireless upgrades around the world: including the US, Canada and The Chinese market." Brad told the media.
The ID.5 is also Volkswagen's first electric model with "two-way charging" function. This means that the battery of the electric vehicle can not only power the driving vehicle, but also become a mobile energy storage device. In addition, Volkswagen also proposed that "charging will become more convenient than refueling". This is because within this year, Volkswagen will provide a "plug and charge" function for all ID models, which can realize the direct exchange of data between the vehicle and the charging station, and billing will be done automatically.
After id.5, at the Beijing Auto Show in April this year, Volkswagen will show the ID. Aero concept car for the first time in Beijing. Volkswagen says ID.Aero has excellent aerodynamic design, as well as unprecedented space and luxurious interiors. The car has a target range of about 700 kilometers, and the first production models will be delivered to Chinese users in the second half of 2023.
The ID.Life concept car unveiled at last year's Munich Motor Show now has the latest developments – a production version will be launched in 2025 for around 20,000 euros. The launch of the car means that Volkswagen can provide at least one pure electric model for each market segment, which is also the basic condition for Volkswagen to aspire to become the global leader in the electric mobility market.
And that's not all, the specific form of volkswagen's flagship electric model "Trinity" begins to become clear, which will be a luxury electric sedan, which will be born on the highly scalable platform SSP and have L4 level autonomous driving capabilities.
To this end, Volkswagen will spend 2 billion euros to build a new plant near the main plant in Wolfsburg dedicated to the production of Trinity models and subsequent SSP platform models. From 2026 onwards, Trinity models will roll off the production line from the Wolfsburg plant, followed by new models for the SSP platform in North America and China soon. The SSP platform model will be the biggest undercard for Volkswagen to beat Tesla.
Volkswagen is investing 800 million euros in the construction of a new R&D center, the Sandkamp campus in Wolfsburg, which will be the base for the development of the SSP platform and Trinity models. Volkswagen's goal is to make it the world's most advanced R&D center, and its mission is to shorten the vehicle development cycle by 25% by focusing on the vehicle's systems and functions, as well as the decoupling of software and hardware, and to shorten the vehicle project cycle from 54 months to 40 months.
It can be seen that the Volkswagen brand has a clear path to achieve the future electrification goal and a strong confidence base. No matter in which era, technology and products will always be the best medicine for enterprises to maintain their youth.
China Strategy
Volkswagen is still the most popular car brand in the Chinese market, with a market share of about 12% in 2021, ranking first among all car brands. But in the long run, Volkswagen still faces challenges in China, and the first problem is that the electrification transformation it has vigorously promoted is challenged in China.
The ID.family delivered 70,625 units in China last year, failing to meet the initial target of 80,000 to 100,000 units. Feng Sihan, CEO of Volkswagen Passenger Car Brand China, attributed the direct cause to chip shortages, saying: "Until September, the ID. family model has been performing well, and sales have maintained a rhythm of almost doubling every month. But from the fourth quarter onwards, due to the continued impact of chip shortages. The sales of our ID. family models did not go as planned. ”
But the more essential reason is that Volkswagen does not have a good grasp of the consumer demand of Chinese users.
Feng Sihan said that China's new energy vehicle consumers' demand for vehicle interconnection has maintained rapid growth. Therefore, the development trend of new energy vehicles in China is closely related to "smart cars". He added that Volkswagen has taken this trend into account.
To this end, Volkswagen will start from two aspects: increasing research and development related to intelligent interconnection technology and continuing to accelerate the transformation of brand image.
First of all, Volkswagen will fundamentally strengthen its R&D capabilities, Volkswagen (Anhui) will become an important driving force for R&D innovation, and China will also provide strong support for localization software research and development. It is reported that at present, Volkswagen has about 6,000 R&D personnel in China, of which 600 work in CARIAD China.
Feng Sihan revealed that in the near future, the number of employees in China will double. "We will better meet the needs of Chinese users and quickly adapt to new development trends." In the long run, innovation based on the Chinese market will also be promoted to other markets around the world. Feng Sihan further said.
Second, Volkswagen will continue to accelerate the pace of opening city exhibition halls. At present, Volkswagen has opened more than 120 ID. city showrooms in major cities in China, "compared with 4S stores, the order volume of this model has also increased, and the conversion rate from test drive to next order has increased by nearly 50%." Feng Sihan said, "Opening the ID. City Exhibition Hall is the right way." ”
Because this allows Volkswagen brands to maintain direct contact with users, the practice of opening city showrooms in popular shopping streets or shopping malls provides more Chinese users with the opportunity to recognize Volkswagen brands, which is more conducive to changing the brand image.
Moreover, Volkswagen will provide OTA remote wireless upgrades for users of Chinese ID. family models this year, and more L2+ level autonomous driving assist functions will be fully mass-produced in the next two years. This will allow consumers to discuss the Volkswagen brand and trendy car brands such as Tesla, and it will also help to change the brand image.
By stepping up his grasp of the needs of Chinese users, especially in terms of software, Feng Sihan is confident that the sales of the ID. family model in China will double this year. Moreover, he is also confident that by 2030, Volkswagen's market share of new energy vehicles in China will increase to the same share of the current fuel vehicle market. "This general direction will not change." Feng Sihan stressed.
Che Yun Summary:
As the most successful foreign brand in China's history, the name of the Volkswagen brand has long been well known by many Chinese people. But times are changing, and the image of the Volkswagen brand should also change accordingly.
With the rise of the Z era, mass brands should inject a new image into this generation of consumer groups, so as to achieve the brand's eternal youth.
The Volkswagen brand has already tasted the first victory in the electrification transformation, but the Chinese market is the key to maintaining a long-term victory.
2022 is the second year of Volkswagen's electrification offensive in China and will also be a key year to determine the future destiny. There is no doubt that after stabilizing its operations, the Volkswagen brand has decided to focus more on the Chinese market.