VOLKSWAGEN AG. Mr Hans Dieter Pötsch Member of the Board of Management. Sanford Bernstein 1st Strategic Decisions Conference London 2004

Transcription

1 VOLKSWAGEN AG Mr Hans Dieter Pötsch Member of the Board of Management Sanford Bernstein 1st Strategic Decisions Conference London September 2004

2 Volkswagen Strategic Goals Automotive RoI 9% (post-tax) Segment coverage 85% by 2005 Continue profitable / high quality growth of Financial Services Maintain and develop leading position in sustainability indices 2

3 Agenda Macro trends influencing the sector Implications for the industry Solutions The Volkswagen proposition 3

4 The Customer Changes Individualisation of customer demand Multioptional consumer behaviour Greater environmental, price consciousness, and demands on product Shorter product life cycles Consequences Greater variety of bodystyles and niches demanded Consumers are well-informed and less loyal Product content expectations higher, increased sensitivity to purchase / running costs Stronger brand profiling, customer loyalty and personal identification with the brand. Liberalisation of markets Chance to develop new markets (Eastern Europe, Asia) Erosion of middle income group Stratification of market into premium / value segments 4

5 The Customer : Strategic Environment Society in mature markets Today Tomorrow Today Upper 5 % Income class Upper Middle Middle Lower Middle 15 % 35 % 35 % Lower 10 % Entry level car market Entry level car market *) German Ministry of Development (2002) % Society % Society 5

6 Development of Car Costs (German Market) = Fuel Prices Net Personal Income Total Running Costs of a car Source: VDA, Deutsche Bundesbank 6

7 Increasing Fragmentation 1992: 16 Segments 2002: 33 Segments Performance / Fun Performance / Fun Value Prestige Value Prestige Utility / Versatility Utility / Versatility 1) source:internal estimate based on market research: German market 7

8 Automotive Attributes :Premium & Volume Segment Premium Segment Volume Segment - worldcar - global brand recognition - regional market - local content Cars shown :-Audi A8L; VW Golf, VW Gol, VW Jetta 8

9 Automotive Distribution Channels Customer needs: across-the-board approach is loosening Supermarkets Repair workshop Block Exemption: Liberalisation in 2010 Scenarios 2015: Variety of business formats for sales and services Multibrand- Megadealer Flagship Store (owned by manufacturer) Service-Outlets (supporting multibrand) Wholesale distribution: Separation in logistics and marketing functions with regional focus Multibrand dealer 15 min. drive OK Manufacturer Retail min. drive OK 9

10 Financial Services Distribution + Financial Services Business Manufacturer Systems and modules suppliers 7% 16% 62% 5% 9% 15% 12% New car retailing Leasing/Financing business Insurance business Used car retailing 8% Component specialists 8% 2% 2% Standard parts suppliers 5% 5% 4% 17% Car rental business Service and parts business Raw material providers Almost 2/3 of profits per car is realised post-purchase mainly in financing, insurance and services/parts Source: Company data, CSFB estimates, Automotive News 10

11 Financial Services : Customer Retention SALES SUPPORT Brand loyalty FS captive customers Non-FS captive customers 75% 60% 60% 25% Germany USA Average customer buys up up to to automobiles in in his/her life, i.e. purchasing power equals 10x automobile price Source: VWFS AG Internal Estimate 11

12 Quality VOLKSWAGEN EXCELLENCE Q-Method Competence Mature Products Robust Processes Excellent Customer Service Customer Satisfaction Striving for customer satisfaction and efficient processes with minimal error costs Process Orientation 12

13 Possible Solutions Complexity reduction Production location New product concepts Sales 13

14 Complexity Reduction Variant Variety Individual Parts Platform Strategy Module Strategy 14

15 Complexity Reduction : Module Strategy reduction of total investments reduction of parts variance worldwide exchange of parts possible Module Strategy improvement in ramp-up quality through shared experience lower purchase price through increased volume of parts lower development expenditure 15

16 Complexity Reduction 16

17 Production Location Emden Wolfsburg Brüssel Dresden Mosel Bratislava Sarajevo Pamplona Palmela Crewe Hannover Poznan Resende Ingolstadt Neckarsulm Györ Kvasiny Vrchlabi Mlada Boleslav FAW-VW Changchun SVW Shanghai VW de Mexico Puebla VW do Brasil Taubate Anchieta Curitiba VW Argentina Pacheco Martorell VW of SOUTH AFRICA Uitenhage Sant`Agata Bolognese Molsheim Final production and assembly locations worldwide 17

18 Volkswagen Group - Turntable Production Flexibility Traditional factory layout minimal flexibility "VW turntable concept" 100% flexibility Model A Model B Model A Model B Flexibility between products is determined by the installed capacity with little scope for variation. Flexibility between products is determined by demand and reaches 100%. 18

19 Manufacturing Concepts 19

20 Group Marketing Structure Group- Marketing and Sales Sales Logistics Group Service Multibrand Sales Group Marketing Area and Retail Development Group Sales Management Group Sales Germany 20

21 Sales 21

22 Brand Policy Volkswagen AG Seat Audi Volkswagen Škoda auto emoción Vorsprung durch Technik Aus Liebe zum Automobil Škoda - Simply Clever Lamborghini Bentley The ultimate sports car The Sporting Grand Tourer 22

23 Product Policy increase coverage of market segments by volume from 75% to 80 % by mid-2003 and to 85% by 2005, sustain existing price advantage of Volkswagen, enhance Audis position as a premium brand, bring to the market more models in higher margin segments, therefore, increase coverage in terms of earnings from 64% in 2001 to 90% in achieve product policy targets without increasing capex and R&D relative to sales by efficiently redeploying resources, continue to enjoy the savings of the former platform strategy but achieve even greater variety of products through modular strategy, through modular strategy avoid peaks in capital expenditure and R&D and temporary product weakness in the market. 23

24 Volkswagen Product Policy Hatch Notch Station MPV Pickup/ Del. Van SUV Sport Coupé Lim. Coupé Conv. Roadster Luxury Upper *) Upper Middle Middle Compact Small Mini new in 2004/

25 More than 50 years Volkswagen Financial Services Expansion also in Asia 1992 SkoFIN Prague 2004 VW FS New Zealand VW Bank Greece VW FS Taiwan 2003 VW PON Financial Services VWGF Russia 2002 VW FS Australia 2001 VW FS Singapore VW FS Portugal 1999 Integration VVD / Volkswagen Dogus Turkey 1998 VW FS Beijing Office (to be converted to an operating company in 2004) 1997 Volkswagen Finance Japan & Volkswagen Leasing / Bank Polska 1994 Volkswagen Financial Services AG 1991 Fingerma Italia 1989 Creation of FS division based in Braunschweig 1981 Volkswagen Credit USA 1966 Volkswagen Leasing GmbH Expansion in Europe 1964 Volkswagen Finance France SA 1949 Volkswagen Finanzierungsgesellschaft 1938 Introduction of a savings scheme for the first Beetle 25

26 Golf GTI 26

27 VOLKSWAGEN AG Mr Hans Dieter Pötsch Member of the Board of Management Sanford Bernstein 1st Strategic Decisions Conference London September 2004