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Volkswagen - Investing Strongly In Its Future

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Volkswagen Group is a German automobile manufacturer whose main brand is Volkswagen. With headquarters in Wolfsburg, Germany, it is the world's biggest luxury vehicle manufacturer.

Volkswagen creates, produces, and distributes passenger and commercial cars, motorbikes, engines, and turbomachinery, as well as financial, leasing, and fleet management services. It overtook Toyota as the world's largest carmaker in 2016, and held that position for the next three years, selling 10.97 million vehicles.

Volkswagen - Company Highlights

  • Company Name-Volkswagen
  • Headquarters-Wolfsburg, Germany
  • Industry-Automotive
  • Founder-German Labour Front
  • Founded-1937
  • CEO-Herbert Diess
  • Parent-Volkswagen AG
  • Website-vw.com

Volkswagen - About and How it works?

Volkswagen is a premium automobile manufacturer and retailer located in Germany. Volkswagen is derived from the German word Volk, which means "people," and so Volkswagen means "people's automobile" or "people's car." It is divided into four sections:

Passenger Automobiles - includes vehicle and engine research, manufacturing and marketing of passenger cars, as well as the related authentic parts industry.

Commercial vehicles include light commercial vehicles, trucks, and buses, as well as the genuine parts sector and related services.

Large-bore diesel engines, turbo compressors, industrial turbines, and chemical reactor systems, as well as gear units, propulsion components, and testing equipment, are all part of Power Engineering.

Dealer and customer finance, leasing, banking and insurance operations, fleet management, and mobility services are all part of Financial Services.

Among the company's brands are Volkswagen, Audi, SEAT, SKODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen Commercial Vehicles, Scania, and MAN.

Volkswagen - Founder and History

The German government, led by Adolf Hitler of the National Socialist (Nazi) Party at the time, forms the Gesellschaft Zur Vorbereitung des Deutschen Volkswagens mbH, a new state-owned automobile business, on May 28, 1937. It was renamed Volkswagenwerk, or "The People's Car Company," later that year.

Volkswagen was based in Wolfsburg, Germany, and was originally owned by the German Labour Front, a Nazi group. Aside from his ambitious plan to create a network of autobahns and limited-access motorways across Germany, Hitler's favorite project was the creation and mass manufacturing of a low-cost, high-speed car that could be purchased for less than 1,000 Reich marks (about $140 at the time).

Hitler enlisted the help of Austrian automotive expert Ferdinand Porsche to develop this "people's vehicle." “This automobile has been developed for the wide masses,” the Fuhrer said during a Nazi rally in 1938. Its objective is to satisfy their mobility needs while also making them happy.” However, shortly after the KdF (Kraft-Durch-Freude)-Wagen (“Strength-Through-Joy”) was presented at the Berlin Motor Show in 1939, World War II broke out, and Volkswagen halted production. With the plant in ruins after the war, the Allies chose to concentrate their efforts on rebuilding the German automobile industry on Volkswagen.

Volkswagen - Logo and its meaning

The Volkswagen logo is made up of the company's initials, with the "V" positioned above the "W," and both letters interacting beautifully.

The blue color of the Volkswagen emblem stands for quality, reliability, and class, while the white hue stands for nobility, purity, and charm.

Volkswagen - Mission

There is no formal mission statement for Volkswagen. Volkswagen's objective, according to a spokesman, is to "provide beautiful, safe, and ecologically sound vehicles that can compete in an increasingly competitive market and establish world standards in their respective classes." The corporate aim encapsulates all the organization undertakes to achieve its vision. Its focus is on maintaining a level of quality that outperforms all other rivals in every way.

Volkswagen - Business Model

Innovation-driven VW introduces new models on a regular basis. It adjusts to fit local needs and focuses on the unique characteristics of each country (esp. in growth markets). VW seeks to decrease costs through efficient manufacturing methods and economies of scale while stressing the requirement for quality. "Offer beautiful, safe, and ecologically sound cars that can compete in an increasingly competitive market and establish world standards," says the organization.

VW secures control and exploits its scale by a degree of centralization, but its worldwide presence allows it to accommodate for local specifics: R&D (including worldwide trend reconnaissance and technology scouting) is headquartered in Germany, with subsidiary research hubs in the United States, Japan, and China. Similarly, Group procurement buys manufacturing supplies, services, and Capex in bulk to maximize negotiating power, but it does so from 39 sites in 23 countries.

VW develops sustainable, long-term relationships with a range of suppliers and requires a high level of quality and dedication to ensure steady and efficient flows of high-quality and innovative sourced components.

The Group's multi-brand approach encourages internal competition, encourages switchers to try new brands, and appeals to a wide range of individuals. Because of its strict hierarchical brand design with sub-brands, internal cannibalism of sales is reduced. Passenger (VW), premium (Audi), luxury (Porsche), and commercial business holding firms are the four product categories in the corporation. The brands are translated into the corporate hierarchy and are used to arrange the business in order to represent customer preferences within the company.

Volkswagen - Revenue and Growth

Volkswagen AG reported $60.736 billion in revenue for the quarter ended March 31, 2020, down 10.89 percent year over year.

Year Annual Revenue Percentage change

2019 $282.948B +1.58%

2018 $278.538B +6.83%

2017 $260.74B +8.45%

Volkswagen - Competitors

The competitors of Volkswagen Automobiles are:

  • Ford
  • General Motors
  • Toyota
  • Suzuki
  • Hyundai
  • Nissan
  • Honda
  • FCA (Fiat Chrysler Automobiles)
  • BMW
  • Mercedes

Volkswagen - Challenges Faced

Economic volatility and greater competitiveness, as well as the costs of the current diesel crisis and new, time-consuming exhaust testing in the European Union, are among the issues.

According to chief financial officer Frank Witter, the cost of executing the Worldwide Harmonized Light-Duty Test Procedure (WLTP) testing surpassed €1 billion (S$1.6 billion). Production increased by 13.5 percent in the second quarter, more than twice the growth rate of deliveries, as the automaker prepared for the regulation change. Volkswagen warned earlier this year that inventories might pile up ahead of the WLTP's implementation on September 1st.

VW is grappling with political issues as well as internal transformation in the aftermath of the three-year-old diesel scandal, which continues to haunt the industrial juggernaut.

The business incurred penalties of €1.64 billion, mostly due to a punishment imposed by German authorities, bringing the total losses to almost €27.4 billion. Mr. Rupert Stadler, the now-suspended chief of Audi's premium division, was arrested by Munich prosecutors in June and is still detained.

As per a spokesperson, a subsequent partnership with Ford in light commercial vehicles would allow the companies to pool development resources for electrification, lowering one-time costs in areas such as battery-powered and self-driving cars, both of which are gaining pace at the same time.

"We cannot rest on our laurels because great challenges lie ahead of us in the coming quarters," Mr Diess (chairman of the board of management of Volkswagen Group) said. "Growing protectionism also poses major challenges for the globally integrated automotive industry."

Volkswagen - Future Plans

Between 2020 and 2024, planned investments and development expenses in future sectors such as hybridization, electric transportation, and digitization will reach over EUR 60 billion.

In Planning Round 68, the share of anticipated spend on future themes grew to over 40%, up from around 30% in the previous Planning Round.

The Volkswagen Group continues to make significant investments in its future. Planning Round 68 resulted in the creation of the investment plan for 2020 to 2024. The Group plans to invest over EUR 60 billion in hybridization, electric mobility, and digitization over the next five years. This amounted to around 40% of the company's property, plant, and equipment investments, as well as all research and development costs, throughout the planning period. It's a ten-percentage-point rise over the previous Planning Round for the Group. The Group expects to invest about EUR 33 billion in electric vehicles alone.

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