By Victoria Waldersee and Jan Schwartz
BERLIN (Reuters) -Volkswagen set new financial targets on Wednesday of 5-7% annual revenue growth by 2027 and 9-11% returns by 2030, aiming to stay disciplined on investment and focus on boosting margins in the face of growing competition for market share.
The German carmaker has set “performance programmes” for each brand, allocating them capital and setting a specific return on sales target, but delegating responsibility to the brands for how those targets are reached, executives said in a press call on its Capital Markets Day.
“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,” Chief Financial Officer Arno Antlitz said.
“We are convinced in the transformation we need 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 added.
In China, where internal combustion engine sales still provide high revenues for the carmaker, it 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 Volkswagen’s performance in recent years, with revenue growing just 1.1-1.2% per year in the last two years, and 0.7% in 2018-2019 prior to the pandemic.
Under the new performance programmes, each brand will have a set target for operating result, returns, net cash flow, cash conversion rate, and investment ratio, Volkswagen said in a statement, adding it would tie management incentives to meeting targets.
The carmaker is planning separate capital markets days for each brand over the coming months to introduce those targets, sources close to the company told Reuters last Friday.
(Reporting by Victoria Waldersee, Jan SchwartzEditing by Matthias Williams and Mark Potter)
