Volkswagen (VW) is set to accelerate product development at its software unit, Cariad, according to VW CEO Herbert Diess’s remarks.
With a focus on “value over volume,” VW aims to increase its returns to 9-11 percent by the end of the decade. This shift in strategy reflects the company’s commitment to improving profitability. In 2020, VW’s operating margin climbed to 8.1 percent, with substantial support from its Porsche sports-car business, which has now become a separate entity.
Over the next few years, VW plans to achieve an average annual sales growth of 5-7 percent until 2027.
To achieve its goals, VW’s Chief Financial Officer, Arno Antlitz, emphasizes the need for a change in strategy. VW has traditionally experienced fixed cost growth, and now it seeks to exceed these costs by focusing on value over volume. This entails stringent cost control and prudent investment decisions to maximize value.
In China, where traditional combustion engine sales remain a significant revenue source, VW has recalibrated its target for battery-electric vehicle sales in the next 1-2 years. The company’s priority is to safeguard margins in this crucial market.
The new revenue growth target represents a considerable shift from VW’s recent performance. Over the past two years, revenue growth averaged just 1.1 to 1.2 percent annually, with a mere 0.7 percent increase in 2018-2019 prior to the pandemic.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.