Production
The international, cross-brand production network enables the process from the supplier to the factory and assembly line, and from the factory to dealers and customers. 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 a flexible team. At 8.72 million vehicles, global vehicle production in fiscal year 2022 was 5.2% up on the prior-year figure. Productivity increased by 1.2% year-on-year.
The shortage of semiconductors and the disruption of supply chains caused by the Russia-Ukraine conflict and the Covid-19 pandemic restricted production in the Volkswagen Group; the supply and production situation eased toward the end of the reporting period.
one.PRODUCTION production strategy
Production is supporting the Group NEW AUTO strategy with its one.PRODUCTION functional area strategy. By adopting a common approach for the thematic focus of our activities, we aim to pool the strengths and potential of our global production and logistics across brands and take advantage of the resulting synergy effects.
We have created content clusters around the following topics: production network, efficient processes, environment, digitalization and innovation, and cooperation. Within these five strategic goals, expert teams work on the strategic topics relevant for production in the Group. Examples include the design of our global production network, increasing efficiency in production processes, the reduction and offsetting of environmental impact throughout the production process, and the digital transformation of production and working processes and of collaboration formats.
Our scenario-based strategy process provides the thematic framework for the strategic goals. 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.
Global production network
The Group’s production network encompasses 119 production sites, including our Chinese joint ventures. 72 of which 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 38 vehicle projects in 2022, 12 of which were new products or successor products and 26 were product upgrades and derivatives.
The flexible production capacities provided by our platforms allow us to respond to market challenges, make requirements-based use of the production network and leverage synergies across brands through
multibrand sites. Currently, almost half of the 46 passenger car locations are already multibrand locations. The Bratislava plant continues to serve as a prime example in the Group, producing vehicles for the Volkswagen Passenger Cars, ŠKODA, Audi and Porsche brands.
With its NEW AUTO Group strategy, the Volkswagen Group has set itself the goal of becoming one of the world’s leading providers of sustainable mobility. Here, the priority is to make mobility solutions which are innovative, efficient, sustainable and customer-oriented, as well as geared towards profitable growth. The foundation for these efforts was the introduction of the Modular Electric Drive Toolkit (MEB), which we are using to complement our range with additional battery-electric vehicles. We have been manufacturing battery-electric vehicles based on the MEB in Zwickau, the Volkswagen Group’s first electric car factory, since 2019. One example is the ID.3 from the Volkswagen Passenger Cars brand. The portfolio of the MEB platform in Zwickau was expanded in 2021 through the addition of the CUPRA Born and the Audi Q4 e-tron, and in 2022 through the addition of the ID.5 from Volkswagen Passenger Cars. Furthermore, we use an all-electric platform for premium and sports brands – the Premium Platform Electric (PPE) – to leverage synergies in production across brands. This meant that electric vehicles were manufactured at 14 sites across the global production network as of year-end 2022.
VEHICLE PRODUCTION LOCATIONS OF THE VOLKSWAGEN GROUP
Share of total production 2022 in percent
New technologies and digitalization
Digital and innovative technologies are systematically validated in the Volkswagen Group 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 2022 included computer vision, augmented reality, process mining and AI robotics.
Based on Volkswagen’s proprietary computer vision platform, artificial intelligence, for example, is being used for complex image inspections, among other things, and implemented across brands at other sites. Innovative applications are also being developed locally at the plants and are made available to the Group via the central cloud-based Digital Production Platform (DPP). Despite the Covid-19 pandemic and difficult conditions, the expansion of the DPP was driven forward in collaboration with Amazon Web Services (AWS) and Siemens. Since 2019, 26 production sites have been fully linked up to the DPP and equipped with applications developed in-house for improving production and logistics. 2022 also saw increased exchange of local solutions between the sites via the DPP. Examples of overarching solutions on the DPP include localization services for vehicles and car bodies on the factory premises, intelligent plant monitoring systems, digital shop floor management, and quality processes and end-to-end quality control loops supported by artificial intelligence. This will also allow conventional processes for example test drives conducted at the factories for vehicle acceptance purposes to be replaced by applications developed in-house such as the road test predictor – or reduced to a minimum. Modern, efficient management of the IT environment in the production network will help to drive the success of the digital transformation in production and logistics. Here, an architecture management system has been defined for this and established as an interdisciplinary collaboration model for coordinating and harmonizing requirements from strategy, governance and reference development.
Catena-X will enable Volkswagen to shape the future of the automotive supply chain in conjunction with other manufacturers and suppliers. The aim is to build a global data network 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.
Zero Impact Factory
We are planning the production of tomorrow with our one.PRODUCTION functional area strategy. Emission levels and the use of resources at Volkswagen Group sites require particular attention. The Zero Impact Factory program is developing specific steps for production that no longer has an adverse environmental impact and supports our environmental vision goTOzero. In 2023, as part of an internal survey phase for the Zero Impact Factory, we will start collecting extensive data and information at all sites where we produce passenger cars and light commercial vehicles. To map the environmental impact in absolute terms, we will collect data on 22 quantitative indicators as impact points. With the site checklist, we will review the implementation status of 143 qualitative environmental criteria.
The impact points and the site checklist will be used to gather data on criteria in the fields of climate protection and energy, emissions, water and waste. However, the focus will also be on aspects such as the appearance of the factory, commitment to biodiversity, protection of soil, avoidance of operational disruptions, functioning environmental compliance management, improvement of resource efficiency towards a circular economy, and environmentally neutral mobility management for employee and goods transport. These methods will allow us to implement pinpointed reduction measures where they will have the greatest impact.
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 purely performance-based indicators to a reduction in the environmental impact of our production processes in absolute terms. Our goal is to achieve Zero Impact Factory status for all of our manufacturing plants for passenger cars and light commercial vehicles by 2050.
To support such and other programs, a management system developed in-house has been introduced at all production sites worldwide since 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, but 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 period.
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 period, around 1,400 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 have a positive effect on the Group’s environmental indicators and are often also beneficial from an economic perspective.
GoTOzero Impact Logistics
In the joint “goTOzero Impact Logistics” initiative, Group and brand logistics departments also work together to help achieve the goals of the goTOzero environmental mission statement. Continuous optimization of the transport network and logistics processes can reduce emissions – this includes the use of digitalization tools. The use of new low-emission technologies for transporting production materials and vehicles will also be continuously analyzed and accelerated.
The measures the Volkswagen Group is taking to achieve carbon-neutral logistics in the future 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 Deutsche Bahn AG and other rail service providers. Further rail traffic in Poland was switched over to green electricity in the third quarter of 2022, for example.
In addition, Group Logistics is using the two roll-on/roll-off (RoRo) charter ships powered by low-pollution liquefied natural gas (LNG) for transporting vehicles across the North Atlantic. Group Logistics plans to replace conventionally operated ships on the North Atlantic route with four more car freighters with the same propulsion system from the end of 2023. In contrast to other LNG-fueled marine engines, Group Logistics’ charter ships are climate-friendly because the high-pressure technology of the two-stroke engines from MAN Energy Solutions allows almost no methane to escape. As a rule, the dual-fuel engines will also enable non-fossil fuels – biogas (bio-LNG), e-gas (synthetic gas) from renewable sources, or biofuel – to be used in the future so that carbon emissions can be reduced even further.
In addition, Group Logistics permanently operates two charter ships on European sea routes using certified renewable fuel. Used cooking oils and fats – waste and residual materials from the catering and food industries, for example, that cannot be used for further processing into food or animal feed – provide the raw material for the biofuel, which produces less CO2 than conventional fossil fuels.