Annual Report 2023

To our Shareholders

Letter to our Shareholders

Dear Shareholders
Oliver Blume (photo)

Growth that enhances value for years to come: that is the Volkswagen Group’s objective. For our investors, for our customers, for our employees and for society as a whole.

Amidst a demanding environment, we delivered robust results in fiscal year 2023. We increased deliveries to customers by 12% to 9.24 million vehicles, with all regions contributing to this growth. In China, the Group’s largest single market, we expanded by 1.6% despite a very challenging market environment. At the same time, the Volkswagen Group successfully continued its transformation, delivering 771,100 all-electric vehicles, up 34.7% compared with the previous year. In Europe, we further consolidated our strong market position in this segment.

Our robust financial performance reflects our customers’ satisfaction in our products. With sales revenue of €322.3 billion, an operating result of €22.6 billion and a resulting operating return on sales of 7%, we have demonstrated the resilience of our business model. These results were achieved despite substantial headwinds from the measurement of commodity derivatives, which had had a beneficial effect on the operating result in the previous year. Another successful outcome of our endeavors was that we generated convincing net cash flow in the Automotive Division on the back of earnings of €10.7 billion. What’s more, the Automotive Division’s net liquidity of €40.3 billion at the end of 2023 puts us in a very solid position.

The Volkswagen Group delivers. Again and again. And it does so reliably, even in a market environment characterized by uncertainty. We are proud of our strong performance, and it is important to us that our shareholders also participate in this result. The Board of Management and Supervisory Board therefore propose a dividend of €9.00 per ordinary share and €9.06 per preferred share.

Our focus is on electrification. At the same time, we are seeing that the ramp-up of e-mobility in some regions, such as North America and Europe, is progressing at a slower rate than previously assumed. Other countries, such as China, continue to impress with the speed of their transformation. This is why the Volkswagen Group is pursuing powertrain flexibility and financial robustness. Our unique portfolio provides the right products for customers. While we are investing extensively in the ramp-up of e-mobility, we continue to offer highly competitive, efficient and attractive combustion-engine models. By including both these models and our hybrid and electric vehicles in our portfolio, we ensure maximum flexibility without losing sight of our goal – the transition to e-mobility is our priority.

The Top 10 program again guided the success of our operational and strategic actions in the past year. We set priorities, and in doing so follow a clear and transparent logic: specific milestones, clear responsibilities and regular progress reviews. One of the key points of the program is to align our company with the capital market. The development of virtual equity stories for all Volkswagen Group brands was an important element in this pursuit. To us, investors are more than an important source of impetus: as shareholders, they are part of our company. Generating added value for them, together with all other stakeholders, is a key component of how we see our corporate governance role. This was one of the motivations for the Group Board of Management to seek intensive dialog with the capital market; as part of personal discussions at investor conferences in the world’s most important financial centers or at our Capital Markets Day held at the Hockenheimring in June 2023.

2023 was a year of realignment and restructuring for the Volkswagen Group. In many areas, we made faster progress than originally planned and expected. A lot of streamlining has been completed, and we are forging ahead with other tasks. We are transforming ourselves. The ground has been prepared: we are turning from renovator to architect and builder all in one. We have a plan and a clear view of the strengths and potential of the Volkswagen Group. We know where we are heading. We know the way. Our focus is on implementation. We are moving ahead, step by step and day by day, making visible, measurable progress.

The Group’s strength lies in the strength of its brands. No other company offers such a compelling, strong and unique product portfolio. We cater to our customers’ wishes in all segments and across all vehicle categories. We set high standards for the quality and design of our vehicles. In the past, we did not always meet these standards – our own and those of our customers – to the fullest extent. Last year, we established ambitious quality and design programs across all brands, drawing on synergies and lessons learned from all players in the Volkswagen Group team. Initial results have shown that we are on the right track. 2024 will be a record year for new models. The launch of our first vehicles on the all-electric premium PPE platform, the Audi Q6 e-tron and the Porsche Macan, is an important milestone. They mark the establishment of a new generation of powerful, attractive models.

We have lived up to our responsibility in the interest of generations, for generations. Our brands and our products must be viable for the future. To achieve this, we have to make a strong investment in the future.

– Oliver Blume –

We have lived up to our responsibility in the interest of generations, for generations. Our brands and our products must be viable for the future. To achieve this, we have to make a strong investment in the future. We have to be in a position to finance this goal, which is why we have agreed clear targets with all brands and launched effective performance programs. These programs are not just to make cost savings: they are a unique opportunity to shape things. We want to prepare the brands for future success, which includes new sources of revenue. It’s about sustainably increasing our profitability.

Living up to our responsibility also means that we think of sustainability holistically, mindful of the natural environment, people, society and value-creating entrepreneurship. We have launched ambitious, structured programs in the Volkswagen Group and in all the brands. Meeting the targets set in these programs is the personal responsibility of the managers. An important element of our sustainability strategy is our commitment to decarbonization. Production is one of the key levers in this regard: by 2030, we aim to cut production-related CO2 emissions from passenger cars and light commercial vehicles by 50% compared with the base year 2018. The prestigious Science Based Targets initiative (SBTi) has confirmed that, by setting this target for the production phase (Scope 1 and Scope 2), our company will meet the requirements for contributing to limiting global warming to 1.5 degrees Celsius. The target to reduce CO2 emissions during the use phase (Scope 3) by 30% has been confirmed by the SBTi as compliant with limiting global warming to 2 degrees Celsius. These confirmations are an incentive for us.

The Volkswagen Group team stands for a new leadership mindset. Together, we have committed ourselves to a clear stance: one of entrepreneurship and individual responsibility, a winning stance. Volkswagen – our joint enterprise. Those are our tasks. And it is for us to solve them.

In 2023, we homed in on one of our key skills, technology leadership, which is an integral part of Volkswagen’s DNA. The customers of our strong and captivating brands benefit from an intelligent platform strategy. This is also the key to creating greater efficiency, using synergies and building economic resilience in challenging and fiercely competitive times. In this process, we think from the customer’s perspective and are able to offer attractive vehicles with attractive solutions at an attractive price. With the realignment of our architectures, the establishment of technology profiles, progress in implementing the battery strategy and the expansion of high-performance charging networks, we have already achieved important milestones. The realignment of our software activities also is a powerful lever in the revision of our technology strategy. We focus on our core competencies, and also collaborate with a strong network of high-performing partners.

The Volkswagen Group thinks global and acts local. We want to remain strong in Europe and China and take advantage of our growth opportunities in North America. We do so with products tailored to the various requirements of our customers in different regions. Our strategy for the largest single market is entitled “In China for China”, and our actions have reflected the meaning of these words. In Hefei, we established Volkswagen China Technology Company last year. Today, more than 2,000 technology experts are already working here on the future of Chinese automaking. We aim to cut the development time for new products and technology by around 30% compared to the status quo to be in line with “China speed”. We are also making our product substance in China more Chinese. Our cooperations with strong partners such as XPeng, Thundersoft and Horizon Robotics are helping to make this possible: we will continue to work on the development of vehicles that are fully aligned with the needs of Chinese customers. In the North America region, we have taken significant steps forward by making fundamental strategy decisions such as on increasingly localized production, the construction of a battery cell plant in Ontario, Canada, and the revival and electrification of the traditional Scout brand. Here we will make increased use of product synergies to leverage our growth potential with local production. Beyond the markets in China, North America and Europe, we also apply regional strategies in the growth markets of South America and India.

We established a new steering model in 2023, which signifies less head office and more entrepreneurial responsibility and greater creative freedom for the brands and their decision makers. We pursue intelligent capital allocation and set clear guidelines.

Growth that enhances value for years to come, with our transformation, ladies and gentlemen, we are making systematic progress toward realizing this objective. Step by step. After a year of reorganizing and streamlining our structures and focusing on the fundamental alignment of the Volkswagen Group, we are heading into a year of stabilizing and shaping our business. The path is clear. We are working toward the vision of a sustainably profitable group. A group with the most attractive products, the best team and the clear promise: sustainable mobility for generations to come.


Oliver Blume (signature)

Oliver Blume

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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