In the second half of the reporting period, most European markets experienced a sharp fall in unit sales that had a noticeable impact on the entire European automotive industry. At our largest competitors, the drop in unit sales in core segments led to a decline in plant and workforce capacity utilization, which in extreme cases even resulted in factory closures. For several reasons, the Volkswagen Group was able to address this risk successfully and thus keep capacity utilization at its European locations largely unchanged: firstly, the Volkswagen Group benefits from its broad product range, so that declines in individual vehicle segments can be offset elsewhere. Secondly, our presence in almost all the world’s markets also helps us to absorb fluctuations in demand in one region in our global production network. However, these two factors can only come into play as a result of our flexible production network, which uses turntable concepts, for example, to distribute production volumes evenly and hence minimize the impact on individual sites. This applies to both vehicle and component factories.
Nevertheless, shifts between the vehicle segments – as a result of the sales crisis in Europe – may, for example, cause the balance of demand between different vehicle equipment features to deviate sharply from the original plan in the short term, potentially leading to supply bottlenecks, for example. We have various tools that enable us to spot such changes in demand as early as possible, introduce appropriate measures to adjust capacity and thus minimize the supply risk during peaks in demand for individual vehicle features. For instance, we regularly examine the feasibility of various demand scenarios in light of the components available and, if necessary, identify appropriate adjustment measures based on our findings. We also have extensive flexibility in the areas of logistics and existing working time models.
Special risks may arise during large projects. These result in particular from contracting deficiencies, miscosting, post-contracting changes in economic and technical conditions, and poor performance on the part of subcontractors. We counter these risks by performing appropriate project controls throughout all project phases.