The Volkswagen Group has in principle confirmed the strategic targets set out in its strategy Together 2025+ for operating return on sales, return on investment, capex ratio and R&D cost ratio, net cashflow and net liquidity within the ‘Planning Round 68’.
The VW Group plans to spend nearly EUR 60 billion on the future areas of hybridisa tion, electric mobility and digitalisation in the next five years. This amounts to slightly more than 40 percent of the company’s investments in property, plant and equipment and all research and development costs during the planning period. Compared with the Group’s last Planning Round, it represents an increase of around 10 percentage points. The group intends to invest around EUR 33 billion of this figure in electric mobility alone.
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“We are continuing to pursue our ambitious strategic financial targets for 2020 and 2025. We also confirm our outlook for 2019. The Volkswagen Group remains very robust in the face of increasingly difficult economic conditions. However, we will have to apply systematic cost discipline to reach our long-term goals,” Frank Witter, the member of the Volkswagen Group Board of Management responsible for Finance and IT, said in describing the impact of Planning Round 68 on the strategic financial targets.
In 2020, VW Group says the operating profit before special items should remain at 6.5 percent to 7.5 percent. A level of 7 percent to 8 percent is being strived for by 2025. The return on investment in the Automotive Division should be between 12 percent and 14 percent from 2020 onwards and more than 14 percent starting in 2025. The group will continue to pursue its strategic targets for the capex ratio and the R&D cost ratio. Each should be 6 percent from 2020 onwards. The aim is to achieve net cashflow of at least EUR 10 billion and a net liquidity in the Automotive Division of more than EUR 20 billion by then.
During Planning Round 68, the long-term plan for the next 10 years was also modified. Through 2029, the VW Group plans to introduce up to 75 all-electric models to the market along with about 60 hybrid vehicles. The number of projected e-vehicles will rise to about 26 million, largely due to the addition of a year to the planning period to include 2029. Volkswagen is also planning to sell nearly 6 million hybrid vehicles by 2029.
About 20 million of the e-vehicles planned through 2029 will be based on the Group’s Modular Electric Drive Matrix (MEB). Most of the remaining 6 million vehicles will be based on the High Performance Platform (PPE). E-vehicles are scheduled to be made outside Germany by the company’s plants in Mlada Boleslav, Chattanooga, Foshan and Anting. Others will be produced by German plants in Zwickau, Emden, Hannover, Zuffenhausen and Dresden. Plans for the Emden site were confirmed, according to which production of the electric A-SUV (ID.Next) should start in 2022.
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