The Volkswagen brand has introduced a new production strategy—TRANSFORM.TOGETHER—which targets a 30% increase in productivity worldwide by 2025 compared to 2018. Production is therefore making a major contribution to achieving the profitability target of over 6% for the brand.
We must invest heavily in our future. Electromobility, autonomous driving, new mobility services, and digitalization all require significant efforts. To do this, we need a competitive return of at least 6 percent. For only then are we able to finance key future investments from operating activities and thus secure today’s jobs for the future.
Today our operating margin is around 4 percent, which is not enough. That is why we need to intensify our efforts and leverage efficiency reserves. And production plays a key role in that. Under the Volkswagen brand, Production is responsible for 19 factories with over 100,000 employees outside of China. Compared with annual factory costs of approximately 10 billion euros, the annual investment volume is approximately 2.5 billion euros. This is where we see a powerful production efficiency lever.—Dr. Andreas Tostmann, the Volkswagen Brand Board Member for Production
The new TRANSFORM.TOGETHER production strategy—with eight central action areas—lays down the roadmap for leveraging existing efficiency potential and achieving a sustained increase in productivity.
Volkswagen is currently in the midfield compared with our most important competitors when it comes to production and labor costs as well as margins, making overdue investments more difficult. Our processes and structures are too complex. And there is also room for improvement in standardizing our global production network. That is why we are now introducing uniform structures at all factories along with uniform and comparable key performance indicators. In production alone, we have efficiency potential of €2.6 billion through 2025.—Andreas Tostmann
In order to realize these ambitious goals, Volkswagen Production has defined eight main action areas containing concrete measures to drive the progress of the production strategy at all Volkswagen sites:
- Team of the future
- Rework-free products and processes
- Sustainable structures
- Stable sales order process
- Ramp-up excellence
- Low-expenditure factories of the future
- Think Blue.Factory
Process and production optimization plays a key role in the success of the strategy in all action areas. Complexity is being significantly reduced.
Our factories must become faster, leaner and more efficient: in terms of factory costs per vehicle, investments in new resources and products, as well as hours per unit, i.e. the number of hours spent by production and non-production-related units on building a vehicle. We will be making massive reductions in factory costs and investments, for example by reusing existing resources and factory structures and through systematic standardization. That is how we will be cutting investment by €1.5 billion compared with today’s level.—Andreas Tostmann
The brand has targeted a 45% improvement in environmental KPIs at its sites compared to the reference year of 2010.
The improvements in resource efficiency through Think Blue.Factory have also already achieved savings of €130 million since 2010. On average, there has already been a 30% decrease in key environmental indicators. Our long-term goal is ‘zero impact’: CO2-neutral production.—Andreas Tostmann