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VW to deliver new ‘2025’ global strategy

See the light: Volkswagen chief Matthias Mueller still aims to deliver on the Strategy 2018 goal of global sales leadership, but the new Strategy 2025 currently being developed will have more of a focus on profitability.

Scandal hits bottom line as VW details short-term fix-it plan, tackles 2025 strategy

30 Oct 2015

VOLKSWAGEN Group is working on a new ‘Strategy 2025’ that will be released next year, focusing on profitability rather than global sales leadership, as the embattled German car-maker plans for a future beyond the current diesel emissions-rigging scandal.

Group chief executive Matthias Mueller announced the forthcoming strategy this week as the company posted a €3.48 billion ($5.40 billion) third-quarter operating loss after costs involved in the cheating scandal soaked up €6.7 billion ($A10.39b).

The current third-quarter reporting period has also seen Volkswagen relinquish its lead in the global sales race to Toyota – its 7.43 million units are behind the Japanese auto giant’s 7.49 million to the end of September – although Mr Mueller said this week that VW was not abandoning its Strategy 2018, which includes more than 10 million annual sales by that mark (a level it reached last year) and global leadership in vehicle sales, customer satisfaction and quality.

The strategy also calls for a return on sales of at least eight per cent.

While attempting to “look beyond the current crisis”, Mr Mueller detailed five key shorter-term steps to realign the Volkswagen Group and ensure it remains one of the world’s leading car-makers.

These include developing “effective technical solutions” to fix the 11 million-plus vehicles worldwide – including around 100,000 in Australia – affected by the emissions-rigging scandal, with corrective action on German-market vehicles to begin in January.

The second priority is to complete its investigation into how the cheating devices were conceived and permitted, with VW now also hiring audit firm Deloitte to assist in the process and for those responsible to “face severe consequences”.

“We must uncover the truth and learn from it,” Mr Mueller said.

His third priority is to introduce new management structures at the Volkswagen Group, essentially decentralising the company to a greater extent and giving more independence for the brands and regions.

There will be even more synergies sought between the group’s various brands in order to save costs across its current portfolio of more than 300 models, while the fourth priority is to realign the company’s “culture and management behaviour”.

Mr Mueller admitted that changes were necessary in how Volkswagen communicates and how it handles its mistakes.

“We need a culture of openness and co-operation,” he said, calling on all employees to display “more courage, greater creativity and a more entrepreneurial spirit in their dealings with one another”.

Following that, the fifth priority is to move from Strategy 2018 to 2025.

“Many people outside of Volkswagen, but also some of us, did not understand that our Strategy 2018 is about much more than production numbers,” he said.

“A lot of things were subordinated to the desire to be ‘faster, higher, larger’, especially return on sales.”

According to Mr Mueller, the point is not to sell 100,000 more or fewer vehicles than a major competitor. Instead, the real issue is “qualitative growth”.

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