Mr. Hans Dieter Pötsch Member of the Board of Management of Volkswagen AG Finance and Controlling

Transcription

1 VOLKSWAGEN AG Webcast / Conference Call Mr. Hans Dieter Pötsch Member of the Board of Management of Volkswagen AG Finance and Controlling Dr. Wolfgang Bernhard Member of the Board of Management of Volkswagen AG Chairman of the Volkswagen Brand Group July 13, Timetable Half Year Results July 2005 IAA Frankfurt* Sept Q3 Results 3 Nov Supervisory Board Approval PR 54 November 2005 * Press Days 2

2 Agenda Part 1: Mr. Pötsch (Volkswagen Group) Rollout of Planning Round 54 at Group Level Part 2: Dr. Bernhard (Volkswagen Brand Group) Volkswagen Brand Group within Planning Round 54 3 Return on Investment (ROI) Automotive Division %

3 Operating Profit (after Special Items) Volkswagen Group with and without ForMotion billion with ForMotion without ForMotion ForMotion 2005 Target Earnings Contribution 3.1 billion Product costs One-off expenditure 0.40 Overheads Sales performance Commercial Vehicles Financial Services billion Foreign sales subsidiaries 6

4 Key Findings Negatives: - In key measures, the Group as well as some brands lag the competition - Results knocked off course due to external pressures - Targeted weather proofing still not achieved Positives: + Coordinated system for target returns exists and stands up to external requirements + ForMotion was successfully implemented + Lessons from ForMotion useful for further efforts + Cultural change via highly effective internal communication 7 ForMotion plus Negative external trends continue Earnings improvement plan continued: intensity stepped up Target 4 billion net earnings improvement in 2008 All measures, e.g. personnel and purchasing, included in this scheme 8

5 Planning Round 54 Target 4 billion net earnings improvement in 2008 With Planning Round 54, a shift in planning philosophy: - Goal for all brands - Capital allocation to the most profitable business segments - All businesses must reach a minimum ROI - Reappraisal of the cycle plan under return criteria 9% ROI target on Group level remains 9 Agenda Part 1: Mr. Pötsch (Volkswagen Group) Rollout of Planning Round 54 at Group Level Part 2: Dr. Bernhard (Volkswagen Brand Group) Volkswagen Brand Group within Planning Round 54 10

6 Planning Round 54: Process in Volkswagen Brand Group Planning Round 54 covers Kick off end-june 2005 Finalized plan approved by Supervisory Board in mid- November 2005 Identified magnitude of improvement needed Detailed planning now underway Commitments will be made in November All forward looking numbers refer to Volkswagen Passenger Cars 11 Volkswagen Brand Group Decline in Operating Profit billion Q

7 Volkswagen s current challenges Costs Increasing product costs High investments Revenues and performance Price pressure Not enough innovations Weak economy 13 Volkswagen s future challenges Costs Increasing product costs High investments Revenues and performance Price pressure Not enough innovations Weak economy Depreciation Legislation Investments in future markets Raw material prices Labour costs Further price pressure Chinese operations /$ exchange rate Capital markets 14

8 Major volume models already launched Volkswagen volume models Market launch Touran 2 years ago (March 03) Golf 1.5 years ago (September 03) GolfPlus 6 months ago (January 05) Jetta 6 months ago (January 05) Passat Limousine 4 months ago (March 05) Passat Variant in 1 month (August 05) 15 We need to improve our results by 7 billion (gross) to achieve acceptable earnings in 2008 Main contributors Sales and Distribution Material costs Production costs Overhead Warranty costs Gross improvement > 2 billion > 3 billion > 1 billion 0.5 billion < 0.5 billion ca. 7 billion 16

9 Forum Material Costs R&D Interior Vehicle body Electrics Chassis Powertrain P cockpit,dashboard center console R&D P R&D P R&D P R&D P body structure power supply and installations front chassis petrol engine coolant circulation system mirror door module fuel system axle drive/ transfer box 17 Tools at our disposal Full use of modules and components across the group Reduction of complexity Rewarding performing suppliers Global sourcing / diversifying currency footprint Review of technical specifications Review of logistics 18

10 Quality: The road to improvement (I) The Volkswagen brand stands for quality and reliability We do not always keep our promise Goal is to reduce warranty claims for 12 mis in 2008 by 50% 19 Quality: The road to improvement (II) Quality target measured by warranty claims for 12 mis, not by end of line audit Reduce problem solving process from average 48 weeks to 18 weeks Monthly meetings led by Dr. Bernhard Joint responsibility between engineering, manufacturing and quality Executive bonuses tied to quality performance 20

11 Product Strategy: Existing Products Existing products concentrate on core volume segments focus on customer relevant innovation / technology every successor model below cost of predecessor 21 Product Strategy: 2008 and beyond Existing products concentrate on core business focus on customer relevant innovation / technology every successor model below cost of predecessor 2008 and beyond 5 10 new models beyond current product range 22

12 average investment Volkswagen Passenger Cars: 2.5 billion p.a. 2.5 billion We have to do the Homework of a Volume Manufacturer 1. Regain Quality Leadership half the warranty claims in Regain Cost Leadership: 5 billion costs savings gross in 2008 every succeeding product below the costs of predecessor 3. Improve Sales and Distribution Performance: new cars, used cars, services, parts, accessories more than 2 billion improvement gross in Start Model Firework in 2008: defend core segments, create new segments targeted, customer oriented innovations / technology exciting design 24

13 VOLKSWAGEN AG Webcast / Conference Call Mr. Hans Dieter Pötsch Member of the Board of Management of Volkswagen AG Finance and Controlling Dr. Wolfgang Bernhard Member of the Board of Management of Volkswagen AG Chairman of the Volkswagen Brand Group July 13, Disclaimer This presentation contains forward-looking statements and information on the business development of the Volkswagen Group. These statements may be spoken or written and can be recognized by terms such as expects, anticipates, intends, plans, believes, seeks, estimates, will or words with similar meaning. These statements are based on assumptions relating to the development of the economies of individual countries, and in particular of the automotive industry, which we have made on the basis of the information available to us and which we consider to be realistic at the time of going to press. The estimates given involve a degree of risk, and the actual developments may differ from those forecast. Consequently, any unexpected fall in demand or economic stagnation in our key sales markets, such as in Western Europe (and especially Germany) or in the USA, Brazil or China, will have a corresponding impact on the development of our business. The same applies in the event of a significant shift in current exchange rates relative to the US dollar, sterling and the yen. If any of these or other risks occur, or if the assumptions underlying any of these statements prove incorrect, the actual results may significantly differ from those expressed or implied by such statements. We do not update forward-looking statements retrospectively. Such statements are valid on the date of publication and can be superceded. 26