Kevin StraightAndrew Monroe

Brent HopkinsBret Butcher

Barbara Cheng

Volkswage

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VW in Brief

•3rd Largest Automaker in the World•Based in Wolfsburg, Germany•Largest Automaker in Europe•Largest Automaker in China •Stated goal: Become the World’s Largest Automaker by 2018

Key Financial Statistics

VW GM Ford Toyota

447

166 202

377

Total Assets $ Billion

VW GM Ford Toyota

2.34% 2.55% 1.85%4.21%ROA

VW Toyota GM Ford

$474,209

$702,520 $709,712 $811,696

Revenue / Employee

Key Financial Statistics

VW Toyota GM Ford

558,745

338,875 219,000 181,000

Full Time Employees

Recommendation 1Sales Consolidation – Dealerships

Recommendation 1Sales Consolidation – Dealerships

Recommendation 1Sales Consolidation – Dealerships

Recommendation 1Sales Consolidation – Corporate Offices

Regional Brand Management

Recommendation 1Sales Consolidation – Summary

• Dealerships consolidated and grouped by price point when possible• Grouped together vertically when necessary

• Corporate offices organized by region and would be responsible for all brands within the region

• 25% estimated reduction in number of dealerships and dealership staff

~ 5 Years

VW’s Lead Time

(Critical Path)

Recommendation 2Shorten Product Lead Times

• Group R&D tries to predict trends up to 10 years in

advance

• Up to 5 years to produce a new model

• Up to 3 years to allocate production capacity

• Even a small delay can push model to next model

year

• In the US, VW representatives cite “product

availability” as their biggest weakness

Recommendation 2Shorten Product Lead Times`

• Centralize project management for each model

• Find new ways to leverage modular technology. Use

more “off the shelf” parts and subassemblies

• Use more post-modern project management

• Leverage flexible manufacturing

• “Skunk works” approach for key projects

In other words, think more like software company

Recommendation 2Shorten Product Lead Times

Walking a Fine Line:

VW must learn to balance Teutonic perfectionism against the strategic advantage of getting their designs to market on time.

Recommendation 2Shorten Product Lead Times

Recommendation 3VW Electrification Strategy

The Volkswagen Group has been working on e-mobility since the 1970s. ◦ The Volkswagen Group has been working on e-mobility

since the 1970s. ◦ it’s a different story today – interest in e-mobility has

grown substantially steadily improving battery technology falling prices for battery cells, national support programs higher expectations of sustainable vehicle concepts in the

marketplace. Volkswagen Group anticipates that by 2020 electrified

vehicles will make up around 3% of total vehicle production

Recommendation 3 Focus on Plug-In Hybrid

The Volkswagen Group is focusing particularly on the plug-in hybrid concept ◦ combines the benefits of two technologies and

hence offers a majority of customers exactly what they are looking for: attractive electric-drive unit for day-to-day urban use unlimited range thanks to its combustion engine no restrictions on speed or its ability to climb hills or

pull trailer loads substantial potential for reducing CO2 emissions

Recommendation 3 Overcoming Obstacles

Must work intensively on developing electric motors and battery systems◦ build up the necessary manufacturing skills at our

plants in Kassel (electric drives) and Braunschweig (battery systems)

Over two-thirds of the Automotive Division’s €84.2 billion investment program between 2014 and 2018 is earmarked for: ◦ developing more efficient vehicles ◦ drives and technologies ◦ environmentally friendly production processes

Recommendation 3 E-Mobility Campus

Set to open this year within the research and development site at the Wolfsburg headquarters

The Group has already hired additional skilled workers and experts to strengthen its expertise in the area of electric traction ◦ This campus is where the Group will concentrate

its expertise ◦ A total of some 1,100 people will under- take

research and work on this technology there.

Recommendation 3 Delivering Value

Volkswagen’s ideal electric vehicles◦ Are dynamic, highly emotional automobiles that

are fun to drive ◦ they express the driver’s modern attitude to life

and appreciation of advanced technology Our aim is to offer safe, affordable electric

vehicles suitable for everyday use, to almost all customer groups

Recommendation 3 Going Forward

Partner with other major Automakers to share expense of laying foundation for E-mobility◦ Standardized plugs/outlets◦ Build intelligent networks that enable

communications between other vehicles, passers by etc.

◦ Charging strategy◦ Garner support from politicians, local authorities,

energy companies and telecommunications sectors

Questions?