Chairman of the Board of Management of Volkswagen Aktiengesellschaft



Dear Shareholders,

Dear Members of the Supervisory Board,

Dear Colleagues,

Welcome to the 2024 Annual General Meeting of Volkswagen AG.

It is an honor for me to welcome you all to this virtual Annual General Meeting. And I am delighted to have this opportunity to present a roundup of our Company, and to talk about our strong performance in 2023, our projects for 2024, and the Volkswagen Group's strategic orientation worldwide.

A key ambition for the mobility of the future is to play a role in the life of our customers. The foundation for that is captivating, contemporary products and robust financial results. The Volkswagen Group operates from a position of strength. We are currently going through a transformation phase. This is a long-distance race.

The strength of the Volkswagen Group lies in the strength of its brands. We captivate customers worldwide with a fascinating portfolio of products that cater to every need.

Review 2023

In 2023, we launched numerous new products and celebrated highlights that have thrilled fans all over the world. The new VW Tiguan, the ID.Buzz, the Bentley Bentayga, the Porsche 911 Dakar, the VW ID.7, the Cupra Dark Rebel Showcar or the Lamborghini Revuelto are just a few examples.

2023 was a demanding year. The challenges we faced - and still face - were diverse and global in character. Against this backdrop, the Volkswagen Group successfully proved its substance and robustness.

The number of vehicles delivered in 2023 ran at 9.2 million, 12 percent higher than the previous year. All world regions contributed to this growth - with particularly strong development in Europe and North America. Deliveries in China also grew - despite a very challenging environment.

Sales revenue reflected the growth in deliveries. The year-on-year rise was 15 percent

Operating profit came in at €22.6 billion. Net cash flow amounted to €10.7 billion. And the profit after tax ran at €17.9 billion.

A qualitative comparison of our key financial performance indicators gives us the following picture: in absolute terms, our reported operating profit for 2023 is slightly up on the figure for 2022. Before valuation effects, chiefly from commodity derivatives in both years - and this is the real message - operating profit in 2023 saw double-digit growth. The drivers are a solid order bank, an improved product mix and optimized prices. At the same time, the restructuring efforts and performance programs are already gaining traction. The double- digit growth in profit after tax underpins this solid result. And net cash flow more than doubled thanks to more rigorous working capital management. The Volkswagen Group is delivering. And is doing so in the face of difficult conditions and volatile markets. That is a solid foundation. At the same time, we are aware of our problem zones and are systematically addressing them in order to leverage the enormous potential of the Volkswagen Group.

It is important to us that our shareholders also participate in this result. The Board of Management and Supervisory Board therefore propose a dividend of €9.00 per ordinary share and €9.06 per preferred share.

We communicated these results at our Annual Media Conference in March. Coverage by the media confirms that the Volkswagen Group is seen to be tackling and successfully mastering the challenges of the transformation.

Our strong brands are one of the keys to success. They each have a unique identity and iconic vehicles. This year, we opened an exhibition dedicated to these brand icons in the DRIVE Forum in Berlin. They have been delighting and inspiring people for generations, and have characterized the spirit of the times across the decades.

Our TOP 10 program is the key management tool for our actions. We use it to structure our operational and strategic priorities and tasks. With clear, measurable goals, unambiguous responsibilities and a systematic roadmap for implementation.

2023 was the year we restructured the Volkswagen Group. All the goals we set ourselves were met thanks to a tight-knit agenda. And some of these goals were achieved faster than originally planned. Speed is particularly important as regards the transformation the automotive industry is currently undergoing. We are making good progress. Visible and measurable. Day by day. Meter by meter.

Our current planning round focuses on clear premises and the strategic orientation of our company. It is based on strategic planning for investments, a revised product strategy, realistic unit sales volumes for vehicle allocation at our plants, and performance programs for our brands. During the planning period, this approach and these guard rails will bring a significant improvement in result, margin, cash flow, and investment level.

Last year we launched ambitious performance programs throughout company to make the Volkswagen Group and its brands fit for the future. We agreed specific, strategic return targets for each brand. These will result in a strategic return on sales for the Volkswagen Group of between 9 and 11 percent. And, as I am sure you all know from other projects, I set

ambitious goals and aim for double-digit returns. We are working with the same methodology, full transparency and measurability in all the brands. In terms of content, the goals are to increase earnings, work on costs in all areas and at all levels of the company, and to tap into additional sources of revenue.

One of the main reasons that inspires customers to buy our products is their design. We are working methodically with design identities for our brands, identities for product differentiation, and identities for regional design requirements. We have thus systematically launched design programs at all brands. We are convinced that our orientation as a design- driven company offers genuine added value. That means a uniform appearance at all external and internal touchpoints - from the company and the product through to services.

Our customers place the highest demands on the quality of our products. And that is our ambition, too. We look at quality at every link in the chain. From vehicle concept, materials and finish through to software and connectivity. Sale, vehicle handover, vehicle reliability and service are also decisive criteria for customer appeal. For all brands, we have measurable quality programs for every link in this chain. And we are making good headway.

China remains the world's largest single market. 2023 was a successful year for the Volkswagen Group. We maintained market leadership in this dynamic market environment. Our brands put on a strong performance. We expanded total deliveries to 3.2 million vehicles. And the share of electric vehicles increased overall by 23 percent. For Audi, 2023 was a record year for deliveries in China. In terms of strategy, we have developed a China 2030 target for the Volkswagen Group. Under the motto "in China, for China", we are focusing more closely on local, China-specific developments, speed, greater regionalization and new strong partnerships.

North America offers significant growth potential for the Volkswagen Group brands. The revival of the Scout cult brand is particularly promising. This is how we are laying the groundwork for an electric brand for rugged SUVs and pick-ups in the largest and most profitable US segment. We are convinced that the USA, Mexico and Canada are attractive locations for the Volkswagen Group. Construction work has commenced on the new SCOUT factory in South Carolina and on our battery cell factory in Ontario, highlighting our ambitions.

Realigning our software company CARIAD had top priority in 2023. With a new leadership team headed by the new CEO Peter Bosch we are driving restructuring forward. With a systematic 5-point plan we are redesigning processes, organizations, tools, management models, and partnerships. A key factor is the deliverability of the E3 1.2 platform - two important models, the Audi Q6 e-tron and the Porsche Macan, are getting ready for their market debut.

One of the Volkswagen Group's strengths is high-performance, standardized vehicle platforms. Building on this, we have realigned our architecture strategy and defined clear development responsibilities: we are arranging architectures according to performance and functionality segments. Volkswagen, Audi and Porsche have key roles to play in this context. All Group brands access the relevant development capabilities based on their positioning. That gives us high scalability, improves our development efficiency by focusing our brands, and makes the best use of Group synergies.

The battery is at the heart of the mobility of tomorrow. We have bundled our Group's in- house battery cell development and manufacturing activities in PowerCo. Our three battery cell factories are progressing as planned: construction and commissioning of the first lines in Salzgitter has already begun. In Valencia, Spain, and St. Thomas, Canada, excavation work has been completed.

There can be no e-mobility without a charging structure. That is why we are proactively committed to expanding this infrastructure. Today, the Elli network provides access to over 650,000 charging points in Europe. The number of charging points grew 44 percent in 2023. For high-performance charging stations, growth ran much higher, at 118 percent.

Turning to mobility solutions, we have rearranged our map of offerings and partners. A key milestone was the start of development work on the integrated mobility platform. At the same time, the integration of Europcar in the Volkswagen Group unlocks significant potential. And we are also picking up speed when it comes to autonomous driving: we made decisive progress with the autonomous ID.Buzz in the pilot cities of Munich, Hamburg and Austin, Texas.

In the Volkswagen Group, sustainability is our bedrock for responsible action. Our brands have already achieved a great deal. I would like to present a few examples from over 800 individual initiatives in the Volkswagen Group: since 2018, we have reduced absolute CO2 emissions from our own production facilities by 34 percent. Today, the power we purchase for our plants in Europe is already 100 percent green power. In 2023 alone, we invested more than 14 million hours in the professional development of our workforce. The new ID. Buzz contains approximately 25 percent recycled materials. And: in 2023, our donations in the field of social engagement and corporate citizenship came to more than €85 million.

The Volkswagen Group's new leadership team promised to align more closely with the needs of the capital market. For us, investors are both stakeholders and strategic sparring partners. The exchange with them is very important to us. That is why we organized a Volkswagen Group Capital Markets Day in the summer of 2023 as the first in a series of investor events.

The valuable stimuli from this dialog formed the basis for activities implemented under action fields of relevance for the capital market. Here are just a few examples: we have realigned and significantly strengthened our management team. The sustainability strategy has been sharpened and transferred to all brands with clear goals. Our newly-developed battery strategy is on schedule. We have defined targets for the Volkswagen and Audi brands with a clear plan for their implementation. In China, we have developed a strategic program and are picking up speed with local partners. In North America, we are focusing on stronger localization of development and production as the basis for tapping into further market potential. In Europe, we operate from a position of strength with a market share of 25 percent. We have taken significant decisions on improving production efficiency with strategic vehicle allocation to production plants. Ambitious, brand-specific performance programs make a key contribution to financial robustness. Our objective is to generate a contribution of over €10 billion across the Group by the end of 2024 - also to offset negative effects. Subsequently, the annual contributions will continually increase. Our capital allocation is oriented to global profit pools and strategic technological investments. Total investment in the upcoming planning round of €180 billion over a five-year period will be reduced to €170 billion. Further reductions will follow in subsequent years. Management remuneration has been linked to target components such as brand and brand group performance, net cash flow or a personal performance bonus. The robust financial results

highlight the Group's potential. Shareholders and employees will participate appropriately the Group's success. We have made significant progress. In 2024, we will work systematically on increasing our market capitalization. Our efforts in this regard will not be oriented to short-term, temporary effects, but rather to sustained, medium- and long-term development.

We achieved a great deal last year. Those achievements were only possible with an exceptional team. 2023 was a sprint for the 680,000-plus employees all over the world. They are passionate about our company. They make the Volkswagen Group what it is. And that is why I would like to say thank you to each and every one of them on behalf of the entire Board of Management. Well done! 2023 was a great year!

Outlook 2024

These solid results give us a tailwind. A tailwind we need. 2024 is a challenging year.

For the Group and for our brands. For each and every one of us. In times like these, one thing is more important than ever: a strong team. Speaking for myself, I lead a company like a sports team. It's about performance, the right mindset and team spirit. Passion and fairness are prerequisites for a powerful, successful team. So we need the right people in the right positions. The right strategy, the right tactics. And a mindset focused on winning.

As the Group Board of Management and the Extended Executive Committee, it falls to us in particular to set a good example. To take responsibility, give orientation, be reliable in our actions and work in a spirit of trust. That is our ambition and our obligation.

The TOP 10 program for 2024 is clear, simple and explicit. That makes it efficient. All the brands in the Volkswagen Group are following this logic with their specific action areas. That gives us the ability for clear and precise steering in all units - with a high degree of transparency and effectiveness.

Now that we have completed the most important tasks for putting our house in order, we can turn our attention to longer-term goals. This year, we are laying the foundation for the new Group Strategy 2035. It will be the polestar for our actions in the coming decade. Our TOP 10 programs are closely linked to this long-term orientation. They are our short- and medium-term stages for implementing the sustainability strategy. This methodology enables us to respond flexibly to changed conditions without losing sight of the overriding goal.

2024 will indeed be a record year when it comes to new products. We have prepared for the biggest product offensive in the history of the Volkswagen Group. We are planning to debut over 30 new models across all brands this year.

Our product offering brings together: efficient combustion-engine models, modern plug-in hybrids, and pure battery electric vehicles. In e-mobility, we see the future of the automotive industry. Our investments are geared to that. At the same time, we are concentrating on a flexible product portfolio during the transformation phase so that we can cater to the different market requirements around the world. It is important that the e-mobilityramp-up receives support from all sides. There must also be a clear political approach: an unequivocal commitment to e-mobility, a realistic approach to CO2 targets, planning security for industry as regards legislation, a systematic expansion of the charging infrastructure, intelligent

funding models to accelerate the ramp-up, and a well thought-out framework to strengthen German industry in the home market. That is why we see the transformation of our mobility in essence as a joint task of industry, politics and local government.

In the Volkswagen Group we concentrate on value-creating growth. The issue is not higher unit sales at any price. Instead, we work on the principle of "value over volume". Our actions always revolve around our customers.

The market environment for the Volkswagen Group at the start of 2024 was challenging. Total deliveries increased slightly in the first quarter - to 2.1 million vehicles. The main growth drivers were the three regions of China, South America and North America. In China, our all-electric models recorded particularly strong growth, with an increase of 91 percent compared with the same period in the previous year. Incoming orders for electric vehicles in western Europe developed positively. More than twice as many all-electric models were ordered in the first quarter as in the same period last year.

Looking ahead to our expected performance in 2024 we anticipate a slight increase in deliveries to customers for the full year. Overall, we are optimistic that we will be able to maintain our strong positions in the world regions.

Our financial outlook also reflects this. We expect sales revenue growth of up to five percent and an operating margin before special items of between 7 and 7.5 percent. Our corridor for reported net cash flow in the Automotive Division is between €4.5 and 6.5 billion. We expect net liquidity in the Automotive Division of between €39 and €41 billion. Our performance programs are a key driver for the profitability of our brands and the Volkswagen Group.

The Volkswagen Group thinks globally and acts regionally. A core element of our strategy is the local development and production of products for our customers worldwide.

Europe is our home and the core region for the Volkswagen Group. We want to consolidate our strong market position in this region. We manufacture our products in 32 factories in western/central and eastern Europe. In total, we employ more than 490,000 people in Europe.

In China, our goal is to systematically implement our 2030 target. We act "in China, for China". In addition to accelerating electrification, we also use our strong position in combustion-engine models. That is how we retain our financial strength for the transformation. We have over 160 products in our portfolio and serve more than 50 million customers in China. We operate 39 factories with a workforce of 90,000, we have over 3,000 retail partners and our supply network spans more than 9,000 partners. Our ambition is to remain the strongest international car manufacturer in China and to continue to rank among the top 3 automakers. We have a clear plan for realizing this ambition. And we work locally with a strong team for the Chinese market. The Volkswagen Group has a strong foundation in China. This year, we celebrate 40 years of Volkswagen in China. We are proud of the decades-long cooperation with our strong Chinese partners. The Volkswagen Group hosted its first Capital Markets Day in China for Chinese and international investors this year. The event took place in April on the eve of the Beijing Auto Show. The feedback - on the new China strategy, the product initiatives already in progress and our partnerships - was extremely positive. Local development know-how is vital for market success. Setting up Volkswagen China Technology Company was a decisive step in this endeavor. By the end of this year, we will be employing more than 3,000 technology and software experts in Hefei.

"China speed" is our ambition: we want to shorten development times by some 30 percent. We are intensifying our integration in the Chinese ecosystem through Chinese tech partnerships. We are implementing innovations faster and aligning ourselves even closer with the expectations of our Chinese customers. Our cooperation with XPeng is a good example. Together, we are developing two fully-connected electric vehicles for the mid-size segment, thus closing a gap in our product range. The market launch is already scheduled for 2026. We are learning a great deal from one another. The enormous speed of the project is impressive: we are experiencing how Volkswagen can act with "China speed". Audi is also stepping up the pace of electrification. The partnership with the long-standing joint venture partner SAIC has been expanded for this purpose. The aim is to develop progressive electric vehicles with state-of-the-art software. The first model is to be rolled out on the Chinese market in 2026. The overriding requirement for us is that we achieve cost parity with local competitors for all the products we manufacture locally in cooperation with our partners. In China alone we plan to launch more than 40 new models over the next three years - half of which will be NEVs (New Energy Vehicles). At the Group Media Night in Beijing a few weeks ago we premiered the local models we plan to debut on the world's largest auto market.

In North America, we see great market opportunities and significant growth potential.

Our software activities will be a central focal point in the coming year. Software is a core element of the customer experience. One substantial competence of the Volkswagen Group is scalable platforms. We also use this strength for software and the electronics architecture. Software can become a genuine competitive advantage for the Group and the brands. We have defined the technology fields. Now we are concentrating on execution.

A strong team is crucial. I am delighted new experts with long-standing, global experience are now strengthening this team. We would like to give a warm welcome to Sanjay Lal at CARIAD, Sajjad Khan at Porsche and Frank Han at CARIAD China. The Volkswagen Group is integrating strong team players from Silicon Valley and China's technology hotspots.

In the Volkswagen Group, software is no longer just a neat name for a project. We are delivering. Our customers are already benefiting from attractive functions. One example: with the ID.7, Volkswagen has taken its electric models to an entirely new level. And that includes the software experience: we are the first car maker in the global volume segment to offer ChatGPT in our vehicles. We are currently transferring this feature to all other Group products based on the MEB platform with the E3 1.1. software architecture. Just recently, the ID.7 was the first ever vehicle to receive the top score in the ADAC vehicle test.

And the PPE platform with the 1.2 software will also thrill customers all over the world from this year. We deliver an android-based operating system as an open source solution. That enables fast and efficient software engineering. Integrating apps is quick and simple. The infotainment system in the Porsche Macan speaks for itself. For example, with a seamless integration of Apple Car Play, a navigation system with innovative charging planning: it offers optimal planning of charging stops depending on battery status, driving style and the availability of fast-charging stations, or a realistic augmented reality head up display. With these features, vehicles from the Volkswagen Group already match or surpass the competition and win numerous tests.

In future, we are going one step further. Our vision is the Software Defined Vehicle, or SDV. In the past, vehicle development used to begin with the hardware, but now we are initiating a paradigm shift: our development process begins with the software. That means we design

the vehicle from the perspective of our customers' mobile, digital and smart world. Audi, Volkswagen and CARIAD are currently developing this SDV architecture for the first concrete projects.

In addition to software, battery development is also an integral part of our technology strategy. The development of the unified cell is crucial in this regard. It will be used in 80 percent of the Group's electric vehicles by 2030. It will be a benchmark in terms of performance, flexibility and cost efficiency. We are constantly developing the cell chemistry further. We are focusing on a cell format with flexible chemistry, enabling us to respond to changes in market needs. Pre-series production begins this year in Salzgitter. Building our battery cell factories around the world is not just a technological benchmark. We are also generating sustainable added value at local level. In Spain, for example, we are creating hundreds of new jobs at our new gigafactory in Saguonto. This project has also triggered considerable local interest. We had the honor of welcoming His Majesty King Felipe VI in April and to present the progress in construction work.

Expanding the charging infrastructure is and remains fundamental to the attractiveness of e-mobility. Through our own activities, we will have installed over 40,000 fast charging points in Europe, China and the USA by 2025. And we are looking at further opportunities: in the longer term, electric vehicles could prove to be a smart form of power storage. We already use the bidirectional charging concept today. Elli is to be developed into a holistic energy provider.

We are currently building up our Group-wide mobility platform through the close cooperation between Volkswagen Financial Services and Europcar. This cooperation covers both classic leasing and financing of vehicles as well as sharing products. For mobility for just a few minutes or for years: everything is to be controlled via a central app. We successfully tested this integrated app during a pilot phase in Vienna last year. We plan to move forward with the step-by-step expansion of the mobility app this year. The tool is already available to download. Feedback from the first users is very positive.

Going forward, our mobility solutions also take a holistic approach: our strategic activities in autonomous driving have a key role to play in this context. We are doing this together with a strong network of partners: for example, our development partner Mobileye or the Autonomous Driving Alliance, where we engage in collaboration with Bosch and CARIAD. For the Eastern Hemisphere we are cooperating with Horizon Robotics. Autonomous driving is by no means a fantasy scenario any longer: our tests with the autonomous ID.Buzz were a complete success. In future, we will be looking to integrate this function in the interface of our mobility subsidiary MOIA.

The Volkswagen Group bears responsibility for shaping sustainable mobility for generations. Our understanding of sustainability is holistic - it spans the four dimensions of nature, our workforce, society and entrepreneurship. We call this "regenerate+" - the Group's new sustainability strategy. It is one pillar of the overarching Group strategy. We are focusing on a strategic, systematic approach with clear operationalization goals. With clear-cut responsibilities for the Group and our brands. Using the four dimensions of our sustainability approach, we can already present the first selected examples of concrete ambitions in respect of targets.

We have brought forward the net carbon-neutral goal for our own plants to the target year of 2040. Our ambition is for our materials to contain a 40 percent share of recycling products

by 2040. Moreover, we want to set up a biodiversity fund with up to €25 million per year from 2025.

The Volkswagen Group is only as strong as its team. That is why we plan to expand investment in professional development and qualification even further. Our goal is to increase the number of hours spent on professional development and qualification by a further 35 percent by 2030.

The Volkswagen Group bears a great responsibility towards society, the environment and partners. Overall, we will intensify our commitment to projects with a positive effect in the field of social engagement. From 2025, we will launch a Sustainability Impact Fond with a further €20 million per year.

Our engagement also includes our commitment to social cohesion. The Volkswagen Group stands for clear values: for freedom, democracy and cosmopolitanism. For diversity and security. We have taken a clear stance on this in recent weeks and have helped shape the social discourse. Diversity is our strength.

We also see responsible entrepreneurship and sustainability as an economic opportunity. MAN Energy Solutions is one concrete example of this in the Volkswagen Group. We develop technologies there for the sustainable decarbonization of key industries. And sustainability also plays an important role in the financing of our own activities: our aim is to refinance at least 30 percent of the Volkswagen Group's outstanding bond volume via green bonds by 2030.

Ladies and Gentlemen, the Volkswagen Group faces major challenges. Economic and

political. Technological and social. External and internal. But: we have great opportunities to succeed in this demanding environment. The Volkswagen Group has immense potential. We have completed the most important tasks for putting our house in order and laid the key foundations in 2023 for restructuring the Volkswagen Group. We have also set clear guard rails and priorities for 2024 with our TOP 10 program. We will do the right things the right way. The year in which we launch the biggest product offensive in the history of the Group has begun: over 30 models will make their debut this year. 2024 will be a challenging year - in technical and economic terms. We are looking to the future with confidence and are already laying the groundwork for swifter business development from 2025. We stand up for our society, our company, our team and our environment. The Volkswagen Group delivers. We are dependable. And sustainable. Volkswagen takes responsibility.

Thank you for your attention.


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Volkswagen AG published this content on 23 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 May 2024 13:23:02 UTC.