Volkswagen Plans Significant Increase In Profit Margin
Volkswagen plans to significantly improve its earnings performance in the coming years in order to finance investments in future technologies from its own resources.
The Volkswagen brand now aims to raise its profit margin to at least 6 percent by 2022, three years earlier than initially forecast. The current profit margin is at 4 percent. Earlier, Volkswagen had aimed to achieve profit margin at least 6 percent by 2025.
“We are confident that we will be able to reach our target of an operating return of at least 6 percent in 2022, three years earlier than originally planned,” CFO Arno Antlitz said.
Volkswagen said it will be investing over 11 billion euros in e-mobility, digitalization, autonomous driving and mobility services from 2019 to 2023, of which over 9 billion euros will be spent on Volkswagen’s electrification offensive.
Volkswagen currently has two fully-electric cars in its program. The company aims to increase it to around 20 by 2025, with planned production set at over one million units.
The company said it will have to realize higher cost savings than previously planned in order to fund the huge investments.
“We have therefore defined a bundle of measures to improve profitability that will safeguard the full implementation of the pact for the future while also supplementing the topics of the pact and setting the right course for 2025,” Antlitz said.
The company also expects plant productivity to increase an average 30 percent for the period to 2025. At the same time there is to be a massive reduction in the complexity of the model portfolio.
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