Annual Report 2023

Group Management Report


Our international cross-brand production network covers all stages in the process from the supplier to the factory and assembly line, and from the factory to dealers and customers. Its enduring efficiency is a prerequisite for our competitiveness. To be able to meet the challenges of the future, we rely on holistic optimizations, forward-looking innovations, robust supply streams and structures, and flexibility in the production network. At 9.31 million vehicles, the Volkswagen Group’s global vehicle production in fiscal year 2023, including the Chinese joint ventures, was 6.8% up on the prior-year figure. Productivity, including the Chinese joint ventures, increased by 2.5% compared with the previous year.

Both the parts shortages and the disruption of supply chains, most recently caused by the flooding in Slovenia, restricted production in the Volkswagen Group in 2023. The supply and production situation eased toward the end of the reporting year.

one.PRODUCTION production strategy

Production is supporting the NEW AUTO Group strategy with its one.PRODUCTION functional area strategy. We are sharpening our focus in the transformation of our production and logistics, whereby our aim is to minimize expenditure, streamline processes and strengthen the team.

The overarching aim is to increase productivity and profitability. This will enable us to manufacture high-quality products at our sites that give customers maximum benefit at competitive prices. We are adopting a cross-brand approach for the thematic focus of our activities in order to pool the strengths and potential of our global production and logistics across brands and take advantage of the resulting synergies.

Our strategy process is based on a scenario methodology. As part of this, the strategic orientation of production is checked at regular intervals to verify that it is up to date. This provides the thematic framework for the topics being focused on in the year in question. These range from people-related subjects such as skills forecasts, to efficient and resilient processes, safeguarding the achievement of cost targets, digitalization and the environment, and the production and logistics network.

Global production network

The Group’s production network encompasses 115 production sites, including our Chinese joint ventures. 70 of these sites are vehicle production plants. Standardizing production with uniform product concepts, plants, operating equipment and production processes within a product family is a key factor in our forward-looking production. We are constantly enhancing our production concepts and aligning them with new technologies to achieve ambitious targets in the individual projects. In a challenging environment, the Volkswagen Group succeeded in starting up 44 vehicle projects in 2023, 16 of which were new products or successor products and 28 were product upgrades and derivatives.

The flexible production capacities provided by our platforms allow us to respond to changing market requirements, make needs-based use of the production network, and leverage synergies across brands through multibrand sites. Of the 45 vehicle production plants for passenger cars and light commercial vehicles, almost half are already multibrand sites. Models for this approach within the Group are the Bratislava and Zwickau sites. In Bratislava, vehicles of the Volkswagen Passenger Cars, Škoda, Audi and Porsche brands are produced on the joint Modular Longitudinal Toolkit (MLB) and Modular Transversal Toolkit (MQB) platforms. At present, we are manufacturing vehicles of the Volkswagen Passenger Cars, Audi and CUPRA brands on the joint Modular Electric Drive Toolkit (MEB) platforms in Zwickau.


Share of total production 2023 in percent

Vehicle production locations (graphic)

With its NEW AUTO Group strategy, the Volkswagen Group is pursuing the goal of becoming one of the world’s leading providers of sustainable mobility. The focus here is on mobility solutions that are innovative, efficient, sustainable and customer-oriented, as well as geared towards profitable growth. The introduction of the MEB served as a basis for this, and complements our portfolio with additional battery-electric vehicles. We have been manufacturing battery-electric vehicles based on the MEB in Zwickau, the Volkswagen Group’s first fully electrified car factory, since 2019. One example is the ID.3 from the Volkswagen Passenger Cars brand. From 2021, the portfolio of the MEB platform in Zwickau was expanded through the addition of the CUPRA Born, the Audi Q4 e-tron and the ID.5 from Volkswagen Passenger Cars. Since 2023, Volkswagen has also been manufacturing the ID.7 on the MEB platform in Emden. Furthermore, we use the all-electric platform for premium and sports brands – the Premium Platform Electric (PPE) – to leverage synergies in production across the brands. This meant that electric vehicles were manufactured at 18 sites across the global production network as of year-end 2023.

New technologies and digitalization

As part of the one.PRODUCTION strategy, the Group has developed the “Operating System 2030+” approach – a cross-brand vision for the factory of the future. An important dimension of this, and a prerequisite for achieving it, is digitalization towards autonomous factories. The digital transformation is thus shaping the future development of our process landscape and data ecosystem. The corresponding switch to value stream- and product-oriented software development within the Group is bringing greater focus and speed to the implementation of solutions. Overall, more than 69 new applications are already available for use in the production and logistics processes. Examples range from virtual training courses for new vehicle start-ups to the identification and implementation of potential energy savings and the use of artificial intelligence for parts supply by the Scheduling departments. The applications are now being rolled out to over 40 plants via the Digital Production Platform (DPP) jointly developed with our strategic partner Amazon Web Services (AWS).

In 2023, Volkswagen continued its commitment to Catena-X, the first open and collaborative data space for the automotive industry. With Catena-X, Volkswagen is shaping the future of the automotive supply chain in conjunction with other manufacturers and suppliers worldwide. The aim is to build a global data ecosystem for the automotive industry with shared values regarding collaboration, data sovereignty, trust and cooperation. Material traceability along with overarching demand and capacity management and comprehensive bottleneck management are some examples of how we intend to increase the efficiency of our plants and meet future supply chain requirements at the same time. We began using the first applications for partner data management in the supply chain in 2023. Further solutions, for instance for quality cycles and managing shortages of materials, are to follow in 2024.

In the Volkswagen Group, digital and innovative technologies are systematically validated and their use for production and logistics is piloted and rolled out. This is to enable the Group to exploit potential for cost savings in the value chain and realize more flexible implementation options, as well as quality improvements. The goal of the digital transformation in production and logistics is to simplify the entire process chain, make the best possible use of new technologies and establish autonomous processes. Fields of innovation in 2023 included computer vision, augmented reality, process mining, AI robotics and what is known as generative artificial intelligence (GenAI). For example, artificial intelligence is being used on Volkswagen’s proprietary computer vision platform to perform tasks such as complex image evaluations within the operational production process, and is continuously transferred to other sites across the brands. Opportunities to use GenAI are also being evaluated and tested across departments and brands.

Zero Impact Factory

We are planning the production of tomorrow with our one.PRODUCTION functional area strategy. The use of resources and emission levels at Volkswagen Group sites require particular attention. In the Zero Impact Factory program, we are developing specific steps towards more sustainable production, guided by the vision of a factory that has no adverse environmental impact. The brands have been using the measurement methods and management tools developed for this since 2022. These enable us to record and reduce the quantitative environmental impact of our production sites, particularly in the areas requiring action of climate protection and energy, emissions, water and waste. We are also focusing on qualitative aspects such as the appearance of our factories, our commitment to biodiversity, protection of the soil, a functioning environmental compliance management system, improvement of our resource efficiency, and environmentally friendly mobility management for employee and goods transport. A further important milestone was reached in 2023. As part of an internal test phase, we are now measuring 22 quantitative environmental indicators – including CO2 emissions, solvent emissions, freshwater requirements, wastewater loads and different types of waste – at all sites where we produce passenger cars and light commercial vehicles and are converting these into impact points on the basis of their environmental relevance. This makes it possible to compare the environmental impacts with one another and means we can implement reduction measures targeted at precisely those areas in which the greatest positive impact for the environment can be achieved. We use a site checklist to continuously review the status of implementation of a further 143 environmental criteria. Examples of these include projects and measures geared towards maintaining biodiversity, establishing environmentally friendly employee mobility, and promoting the circular economy.

From 2025, the Zero Impact Factory method is to replace the existing KPI system, which measures the reduction of the environmental impact of production (UEP). This represents a shift away from steering based on indicators that are purely performance-based and vehicle-specific to a reduction in the environmental impact of our production in absolute terms. Our goal is to achieve Zero Impact status for all of our manufacturing plants for passenger cars and light commercial vehicles by 2050.

To support programs such as these, a management system developed in-house started being introduced at all production sites worldwide in mid-2019, linking the main compliance issues with key environmental management issues. This environmental compliance management system (ECMS) provides the foundation for compliance with all external and internal rules and regulations relating to the environment.

ECMS implementation was initially concentrated on the major production and development locations, and was extended in a second step to include Group companies whose business activities entail a lower environmental risk. We continued to actively support, monitor and track the rollout and advisory process in the reporting year.

We are encouraging networking and communication between the brands worldwide in order to leverage synergies. Our environmental experts meet regularly in working groups. In addition, we provide our managers and employees with specific training on the topic of environmental protection.

We record and catalog measures in an IT system and make these available for a Group-wide exchange of best practices. In the reporting year, approximately 1,540 implemented measures in the area of environment and energy were tracked and documented via the Maßnahmen@Web system. They serve to improve infrastructure and production processes for passenger cars and light commercial vehicles and are incorporated into the decarbonization index (DKI), for example. These activities may have a positive effect on the Group’s environmental indicators and are often beneficial from an economic perspective.

Zero Impact Logistics

In the joint Zero Impact Logistics initiative, the Group and brand logistics departments work together to achieve the goals of the goTOzero environmental mission statement. By continuously optimizing the transport network and logistics processes – for example by means of digitalization – we can avoid unnecessary shipments and reduce emissions. In addition, the use of new low-emission technologies for transporting production materials and vehicles is examined, piloted and accelerated.

The measures the Volkswagen Group is taking to achieve carbon-neutral logistics in the future also include, for example, moving shipments from road to rail and almost complete avoidance of CO2 through the use of green electricity in rail transport in Germany and other countries in collaboration with railway companies. Volkswagen also transports high-voltage batteries for electric vehicles in an environmentally conscious and efficient manner, for example at the Volkswagen component site in Braunschweig. Here, the batteries are loaded fully automatically onto trains that run on renewable power, which then take them to the Volkswagen plant in Zwickau.

Group Logistics uses two roll-on/roll-off charter ships powered by low-pollution liquefied natural gas (LNG) to transport vehicles across the North Atlantic. At the end of 2023, it started the gradual introduction of four more LNG-powered car freighters, and is thus progressively replacing conventionally operated ships. Compared to other LNG-fueled marine engines, Group Logistics’ charter ships are more climate-friendly because the high-pressure technology of the two-stroke engines from MAN Energy Solutions allows almost no methane to escape. In principle, the dual-fuel engines will also enable non-fossil fuels – such as biogas (bio-LNG), e-gas (synthetic gas) from renewables and biofuel – to be used in future. This will allow carbon emissions to be reduced even further. In the long term, Group Logistics also sees further potential to reduce the level of CO2 with other alternative fuels.

Group Logistics permanently operates two charter ships powered by biofuel on European sea routes. This fuel produces less CO2 than conventional fossil fuels, it is made from used cooking oils and fats. These waste and residual materials that stem, for example, from the catering and food industries, cannot be used for further processing into food or animal feed.

Liquefied Natural Gas (LNG)
LNG is needed so that natural gas engines can be used in long-distance trucks and buses, since this is the only way of achieving the required energy density.
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Modular Electric Drive Toolkit (MEB)
The modular system is for the manufacturing of electric vehicles. The MEB establishes parameters for axles, drive systems, high-voltage batteries, wheelbases and weight ratios to ensure a vehicle optimally fulfills the requirements of e-mobility. The production of the first vehicles based on the MEB started into series production in 2020.
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Modular Transverse Toolkit (MQB)
As an extension of the modular strategy, this platform can be deployed in vehicles whose architecture permits a transverse arrangement of the engine components. The modular perspective enables high synergies to be achieved between the vehicles in the Volkswagen Passenger Cars, Volkswagen Commercial Vehicles, Audi, SEAT and Škoda brands.
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Premium Platform Electric (PPE)
A new vehicle platform for all-electric premium, sport and luxury class vehicles. The components and functions of this platform are especially tailored to meet the high demands of this segment. This platform enables high synergies to be achieved particularly between the Audi, Porsche and Bentley brands.
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