Volkswagen - Investing Strongly In Its Future

Sarika Anand Sarika Anand
Nov 25, 2020 8 min read
Volkswagen - Investing Strongly In Its Future

Company Profile is an initiative by StartupTalky to publish verified information on different startups and organizations. The content in this post has been approved by the organization it is based on.

Volkswagen AG, known internationally as the Volkswagen Group, is a German multinational manufacturing corporation headquartered in Wolfsburg, Lower Saxony, Germany and indirectly majority owned by the Austrian Porsche family.

It designs, manufactures and distributes passenger and commercial vehicles, motorcycles, engines, and turbo machinery and offers related services including financing, leasing and fleet management. In 2016, it was the world's largest automaker by sales, overtaking Toyota and keeping this title in 2017, 2018 and 2019, selling 10.9 million vehicles.

Volkswagen - Company Highlights

Startup Name Volkswagen
Headquarters Wolfsburg, Germany
Industry Automotive
Founded 1937
CEO Herbert Diess
Parent Volkswagen AG

Volkswagen - About and How it works?
Volkswagen - Logo and its meaning
Volkswagen - Founder and History
Volkswagen - Mission
Volkswagen - Business Model
Volkswagen - Revenue and Growth
Volkswagen - Investments
Volkswagen - Acquisitions
Volkswagen - Competitors
Volkswagen - Challenges Faced
Volkswagen - Future Plans

Volkswagen - About and How it works?

Volkswagen AG is a Germany-based company that manufactures and sells vehicles. It operates through four segments :

  • Passenger Cars - which covers the development of vehicles and engines, the production and sale of passenger cars, and the corresponding genuine parts business
  • Commercial vehicles - which comprises the development, production and sale of light commercial vehicles, trucks and buses, the genuine parts business and related services
  • Power Engineering - which consists of the development and production of large-bore diesel engines, turbo compressors, industrial turbines and chemical reactor systems, the production of gear units, propulsion components and testing systems, and
  • Financial Services - which comprises dealer and customer financing, leasing, banking and insurance activities, fleet management and mobility services

Its brand portfolio includes Volkswagen, Audi, SEAT, Škoda, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen Commercial Vehicles, Scania and MAN.

Volkswagen - Logo and its meaning

The Volkswagen logo comprises the company's initials – a “V” placed over a “W” – and both these letters interact superbly with each other.

The Volkswagen Logo
The Volkswagen Logo

The blue colour in the Volkswagen logo symbolizes excellence, reliability and class – whereas the white colour depicts nobility, purity and charm.

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Volkswagen - Founder and History

On May 28, 1937, the government of Germany – then under the control of Adolf Hitler of the National Socialist (Nazi) Party – forms a new state-owned automobile company, Volkswagenwerk, or “The People’s Car Company.”

Originally operated by the German Labour Front, a Nazi organization, Volkswagen was headquartered in Wolfsburg, Germany. In addition to his ambitious campaign to build a network of autobahns and limited access highways across Germany, Hitler’s pet project was the development and mass production of an affordable yet still speedy vehicle that could sell for less than 1,000 Reich marks (about $140 at the time).

To provide the design for this “people’s car,” Hitler called in the Austrian automotive engineer Ferdinand Porsche. In 1938, at a Nazi rally, the Fuhrer declared: “It is for the broad masses that this car has been built. Its purpose is to answer their transportation needs, and it is intended to give them joy.” However, soon after the KdF (Kraft-durch-Freude)-Wagen (“Strength-Through-Joy” car) was displayed for the first time at the Berlin Motor Show in 1939, World War II began, and Volkswagen halted production. After the war ended, with the factory in ruins, the Allies would make Volkswagen the focus of their attempts to resuscitate the German auto industry.

Volkswagen - Mission

Volkswagen does not have an official mission statement. However, a spokesperson for Volkswagen said that the company's goal is “to offer attractive, safe and environmentally sound vehicles which can compete in an increasingly tough market and set world standards in their respective class.” The company goal represents everything the firm does to advance towards its vision. Its emphasis is on maintaining a quality that out wins all other competitors in all facets.

Volkswagen - Business Model

Innovation-driven VW frequently launches new models. It adapts to meet local requirements, and focuses on specific features of individual countries (esp. in growth markets). While emphasizing demand for quality, VW strives to reduce costs through efficient production processes and economies of scale. The group’s goal is to "offer attractive, safe and environmentally sound vehicles which can compete in an increasingly tough market and set world standards."

Through a certain degree of centralization VW secures control and leverages its size, while the global presence allows it to take account of local specifics: R&D (including international trend - and technology-scouting) is fairly centralized in Germany, with minor research bases in the US, Japan and China. Similarly, Group procurement purchases production materials, services and capex centrally to leverage bargaining power, but works in 39 locations across 23 countries.

To ensure stable and efficient flows of high-quality and innovative procured components, VW pursues sustainable, long-term relationships with a variety of suppliers and demands a high degree of quality and commitment.

The Group’s multi-brand strategy generates internal competition, supports switchers experimenting with different brands, and appeals to a broad spectrum of people. Its strict hierarchical brand architecture with sub-brands minimizes internal cannibalization of sales. The brands translate into corporate hierarchy and structure the business to represent consumer preferences inside the organization; the conglomerate consists of four product groups: passenger (VW), premium (Audi), luxury (Porsche), and commercial business holding company.

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Volkswagen - Revenue and Growth

Volkswagen AG revenue for the quarter ending March 31, 2020 was $60.736B, a 10.89% decline year-over-year.

Year Annual Revenue Percentage change
2019 $282.948B +1.58%
2018 $278.538B +6.83%
2017 $260.74B +8.45%

Volkswagen - Investments

Volkswagen Group has made 18 investments. Their most recent investment was on Sep 29, 2020, when Northvolt raised $600M.

Date Organization Name Round Amount
Sep 29, 2020 Northvolt Venture Round $600M
Jun 16, 2020 Audi AG Secondary Market $267M
Jun 16, 2020 QuantumScape Corporate Round $200M
Nov 14, 2019 credi2 Series A -
Jul 12, 2019 Argo AI Corporate Round $2.6B
Jun 12, 2019 Northvolt Corporate Round $600M
May 7, 2019 Gett Series E $120M
Nov 12, 2018 ONO Grant $50K
Jun 21, 2018 QuantumScape Corporate Round $100M
Jun 7, 2018 Gett Series E $80M

Volkswagen - Acquisitions

Volkswagen Group has acquired 3 organizations. Their most recent acquisition was WirelessCar on Dec 19, 2018. They acquired Wireless Car for $122M.

Acquiree Name Date Amount About Acquiree
WirelessCar Dec 19, 2018 $122M WirelessCar is a provider of manufacturers of cars and commercial vehicles with customized telematics services to end-customers
Porsche Jul 5, 2012 - Porsche is a German automobile manufacturer
Scania Mar 3, 2008 - Scania is a manufacturer of heavy trucks and buses as well as industrial and marine engines

Volkswagen - Competitors

The competitors of Volkswagen Automobiles are Ford, General Motors, Toyota, Suzuki, Hyundai, Nissan, Honda, FCA (Fiat Chrysler Automobiles), BMW & Mercedes.

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Volkswagen - Challenges Faced

The challenges range from economic volatility and increasing competition to the costs of the ongoing diesel scandal and new, time-consuming exhaust testing in the European Union.

The cost of implementing Worldwide Harmonized Light-Duty Test Procedure (WLTP) tests reached €1 billion (S$1.6 billion), chief financial officer Frank Witter said. The carmaker churned out more vehicles ahead of the rules change, as production jumped 13.5 per cent in the second quarter, twice the growth rate of deliveries. Volkswagen said earlier this year that the company may experience inventory build-up ahead of the Sept 1 introduction of the WLTP.

VW is grappling with political challenges alongside an internal overhaul in the aftermath of the three-year-old diesel crisis, which continues to burden the industrial giant.

The company took €1.64 billion in charges, mainly for a fine from German authorities, raising the total damages to about €27.4 billion. Mr Rupert Stadler, the now-suspended head of the Audi luxury unit, was arrested in June by Munich prosecutors and remains in custody.

A recent joint venture with Ford in light commercial vehicles will allow the companies to pool development costs for electrification, a spokesperson said, taking the edge off one-time expenditures in areas like battery-powered and self-driving cars that are hitting at once.

"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

  • Planned investments and development costs for future areas such as hybridization, electric mobility and digitalization will total roughly EUR 60 billion between 2020 and 2024
  • Share of planned spend for future topics increased in Planning Round 68 to approximately 40 percent from approximately 30 percent in the previous Planning Round

The Volkswagen Group is continuing to invest strongly in its future. As part of Planning Round 68, the investment plan for 2020 to 2024 has been drawn up. The Group plans to spend nearly EUR 60 billion on the future areas of hybridization, electric mobility and digitalization 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.

“We are resolutely pressing ahead with the transformation of the Volkswagen Group and focusing our investments on the future of mobility. This is part of our systematic and consequent implementation of the Group’s strategy,” said Hans Dieter Pötsch, Chairman of the Supervisory Board of the Volkswagen Group.

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