VW will also focus on speeding up product development at its Cariad software unit, Blume said.
‘Value over volume’
The group is targeting to raise returns to 9-11 percent by the end of the decade, pursuing a strategy of “value over volume.” Last year, its operating margin rose to 8.1 percent. Its Porsche sports-car business, which has since been spun off, underpinned the result.
The group targets annual sales growth of 5 percent to 7 percent on average until 2027.
Chief Financial Officer Arno Antlitz said: “If you look at how Volkswagen operated in the past, often we had a fixed cost growth and we wanted to outgrow that fixed cost.”
The group needs “to change that strategy to our value over volume approach, be very disciplined on fixed cost, be very disciplined on investment and rather focus on value,” he said.
In China, where internal combustion engine sales still provide high revenues for the carmaker, VW has slightly reduced its target for battery-electric vehicle sales in the next 1-2 years and is instead focused on protecting margins, Antlitz said.
The new revenue growth target is a marked jump from VW Group’s performance in recent years, with revenue growing just 1.1 to 1.2 percent a year in the last two years, and 0.7 percent in 2018-2019 prior to the pandemic.