Car manufacturer: VW wants to shake off crises and invest heavily

After the difficult year 2022 with the Ukraine war, delivery problems and enormous inflation, the VW Group wants to significantly expand its business and secure it with further billions in investments.

Car manufacturer: VW wants to shake off crises and invest heavily

After the difficult year 2022 with the Ukraine war, delivery problems and enormous inflation, the VW Group wants to significantly expand its business and secure it with further billions in investments. "We come from a position of strength without losing sight of the extensive fields of action," said CEO Oliver Blume on Tuesday in Berlin.

There, the top management of the largest carmaker in Europe gave an insight into their plans for 2023 and beyond. In the next five years, the Volkswagen Group is investing more than two thirds of its investment budget of around 180 billion euros in e-mobility and digital networking.

2023 should be a "year of delivery".

At the same time, Blume is striving for more efficiency in the long-sluggish development of its own car software. After Herbert Diess was replaced, there was "a renovation and some conversion work," explained the manager. Clearer agreements between the IT division Cariad and the brands as well as a straightened schedule were "one of the most urgent issues" - with the aim of more realistic planning and systematic interfaces. In 2022, Cariad accumulated a loss of more than two billion euros, VW pointed to high start-up costs. 2023 will be a "year of delivery," emphasized Blume.

A lot of money should flow into so-called future technologies by 2027. In the previous large planning round, VW had estimated around 56 percent of the total investment funds of 159 billion euros. By 2025, every fifth vehicle sold worldwide should have a purely electric drive. Up to 15 billion euros are earmarked within five years for the construction of further battery cell factories and for securing raw materials. It has still not been finally decided whether Volkswagen will need the extra plant for the future Trinity core model in Wolfsburg, which was initially planned.

The peak of expenditure is expected to be passed in two years. "After 2025 we can then reap," said CFO Arno Antlitz. For the time being, there is a "high double burden" because, parallel to the expansion of the e-range, combustion engines are also to remain on offer. Stricter EU emissions standards are likely to make cleaning technology for petrol and diesel engines more expensive. The question of whether combustion engines fueled with synthetic fuels (e-fuels) should also be permitted after 2035 is also controversial. flower is for it. Transport Minister Volker Wissing (FDP) had blocked a vote in Brussels because of this controversial issue.

New plant in South Carolina

The Wolfsburg-based company wants to play a bigger role in North America, and in China it wants to strengthen efforts related to digitization in cars. In its most important market, VW has struggled to meet the demands of young Chinese customers. For the USA, the group announced a new plant in South Carolina - pick-ups of the Scout sub-brand are to be built there from 2026. In the southern Canadian province of Ontario, VW is also planning its first factory to manufacture its own battery cells for electric cars outside of Europe. Production is scheduled to start in 2027.

VW wants to take its time with the decision on the location of the fourth European cell plant after northern Sweden, Salzgitter and Valencia in Spain. One will thoroughly "consider where new factories will be built," said Blume. At the moment this is not easy and some EU countries are not competitive on energy costs compared to other regions of the world. Volkswagen is planning a total of six battery cell factories in Europe in order to become less dependent on Asian suppliers. Eastern European countries and other possible candidates in East Friesland and Saxony are hoping for a bid.

The group had already presented its most important figures. After the deliveries of the second-largest car group after Toyota slipped by 7 percent to almost 8.3 million vehicles in 2022, mainly due to supply problems, it is now aiming for 9.5 million units in 2023. Sales are expected to increase by 10 to 15 percent.

Core brand VW passenger cars with jump in profits

VW wants to clear the production backlog and process the orders - in the case of a more stable supply of microchips and raw materials, this should boost sales again. In the end, customers often had to wait a long time. Earnings after taxes improved by almost 3 percent compared to 2021 to 15.84 billion euros. Revenues also increased due to higher car prices from 250.2 to 279.2 billion euros.

Despite declining sales, the core brand VW passenger cars also managed to jump in profits. Earnings from ongoing business increased by 22.5 percent to almost 2.65 billion euros in 2022 - excluding special factors. Sales in the main division climbed 8.7 percent to 73.8 billion euros. VW spoke of "improved price enforcement". The scope of the sales aids has also decreased - the discounts have decreased for many dealers. Porsche even earned 28.3 percent more from operations than in the previous year, with earnings rising to 6.42 billion euros. At Audi (including Bentley and Lamborghini), the plus was similarly large, with profits of 7.62 billion euros.

VW was confident for the coming months. But the risks remain numerous, said Blume: "The geopolitical and economic order of our world is currently being massively tested." The auto industry needs free trade and functioning supply chains. "Raw materials have become considerably more expensive," added Antlitz.

Large parts of the funds raised during the Porsche IPO are to flow into technology development. According to Blume, the group intends to "roll out the new SSP platform across all brands" by the end of the decade. Where exactly which models will be built is still to be decided. The cooperation with Ford on the current electrical construction kit MEB will be expanded with another model from the US car manufacturer.

There is still a "collegial relationship" with his predecessor Diess, said Blume. He does not take direct advice from him. "But we met every now and then at an event."