Share of total production 2012 in percent

In 2012, the Volkswagen Group again expanded its production network and produced over nine million vehicles worldwide for the first time in its history. The Group’s growth goes hand-in-hand with increased production requirements. In order to manage these requirements, the Production function, together with all the brands and regions, prepared the “Production 2018” strategy. Its core objectives comprise enthusiastic customers, a higher earnings contribution, increasing production capacity as well as attractiveness for employees. These objectives were assigned 13 action areas. Members of the Board of Management, senior production management as well as project teams from all the brands and regions assumed sponsorships, which are designed to ensure that the measures in the action areas are implemented in a timely manner. The goal is to build the world’s most powerful and most fascinating automotive production.

Production locations

The Volkswagen Group’s production network was extended by five locations in 2012, and consisted of a total of 99 production facilities worldwide at the end of the reporting period. It comprises 58 automobile, commercial vehicle and motorcycle factories as well as 41 component plants. For the first time, motorcycle plants are part of the production network due to the integration of Ducati into the Volkswagen Group. Following the contribution in full of Porsche’s automotive business to the Volkswagen Group, the corresponding plants in Zuffenhausen and Leipzig are now members of the network. The new vehicle plant in Yizheng in China started production in the reporting period.

With 67 vehicle and component locations, Europe remains the center of the Volkswagen Group’s production activities. The Asia-Pacific region is becoming increasingly important and now has 17 locations. In order to continue serving the key North America market in the long term with locally manufactured vehicles, the Group is now represented there at three production sites. The number of production sites in South America (nine sites) and Africa (three sites) remained unchanged in the reporting period.

China is the Volkswagen Group’s largest sales market. To continue building on the success story in this market, we have decided with our two joint venture partners to extend our environmentally-friendly production capacity. The Shanghai Volkswagen joint venture opened the vehicle plant in Yizheng in southern China in mid-year. Production of the Polo started there initially; manufacturing began for ŠKODA brand vehicles as well in December 2012. The expansion of the existing plants in Changchun, Nanjing as well as Chengdu and other new plants in Foshan and Ningbo will extend capacity in China to around four million vehicles by 2018. The Shanghai Volkswagen joint venture agreed to build a vehicle plant in Urumqi in western China so as to anticipate the expected market growth in the more rural areas of China. In a first step, semi-knocked down vehicles are to be assembled there as early as 2013. To meet the increasing demand for powertrains resulting from the expansion of vehicle production in China, we are building four engine manufacturing sites at different locations, which will produce the latest generation of engines from 2013 onwards. The foundation stone was also laid for a new plant to produce direct shift gearboxes.

In addition to China, the ASEAN region is becoming increasingly important as part of our growth strategy. We began construction of a Volkswagen production facility in March 2012 on the grounds of our partner DRB-Hicom in Malaysia. Up to approximately 30,000 additional Volkswagen models will be manufactured there on a CKD basis starting in the first quarter of 2013. This is a step towards opening up the Malaysian automotive market for the long term and is a key component in our ASEAN strategy. Vehicles for Volkswagen Passenger Cars, Audi and Volkswagen Commercial Vehicles are already assembled by our Indonesian partner Indomobil.

The start of engine production in Silao in Mexico in 2013 marked the opening of the Volkswagen Group’s 100th plant and added additional capacity for local production to the production network in North America. This further strengthens the local presence – as do the locations in Chattanooga, Puebla, Queretaro and San José Chiapa – in the key North America sales market, supports our ambitious growth target in this region and makes an important contribution to hedging currency fluctuations.

The ongoing strong growth of the market in Russia is strategically important to the Volkswagen Group. To continue to and extend our position in this market, we created the basis for increasing short-term local production capacity to approximately 110,000 vehicles each year by signing a contract manufacturing agreement with the GAZ Group in Nizhny Novgorod in June 2011. We launched CKD production of the ŠKODA Yeti there together with GAZ in December 2012. Production of the Jetta will follow in March 2013 and the ŠKODA Octavia in mid–2013. An engine production plant with an annual capacity of 150,000 units is being built close to our vehicle plant in Kaluga to locally supply our vehicle production facilities. The next generation of engines will be manufactured there starting in 2015.

New start-ups and production milestones

Worldwide, the Volkswagen Group implemented 28 new production start-ups during 2012, 14 of which were new products or successor products. The highlight was the start of production of the seventh generation of the Golf in the Wolfsburg and Zwickau plants in August. Production of the new Audi A3 already began in Ingolstadt in April. The ŠKODA brand expanded its model portfolio with the Rapid in July in Mladá Boleslav. Series production of the new Porsche Boxster began in Osnabrück in September. Lamborghini has been manufacturing the Aventador since October in Sant´Agata Bolognese in Italy. The start of the successor to the Leon in Martorell was a major milestone in the SEAT brand’s production calendar.

The Volkswagen Group also celebrated a number of milestones in 2012: the Volkswagen Group celebrated the production of its 175 millionth vehicle in March. In Germany and China, the Tiguan exceeded the one-million mark for vehicles manufactured overall. The three millionth vehicle rolled off the assembly line in our plant in Uitenhage in South Africa in September, and the SEAT brand has now produced 10 million vehicles since becoming a member of the Volkswagen Group. Our component production also reached a milestone: the 111,111,111th transmission was produced in Kassel.

Start of production based on the Modular Transverse Toolkit

The need and demand for vehicles and the number of vehicle and powertrain derivatives is growing just as steadily as customer-specific requirements in the global markets. In order to accomplish this, we must make optimal use of our production capacity. The modular toolkits developed by the Group give us the opportunity to reproduce a wide variety of vehicle and drive concepts with a minimum of effort using a uniform vehicle architecture, thus meeting the demands of the various markets. Thanks to our standardized products and production processes, we can manufacture different models of different brands on a single production line. This significantly increases our flexibility when we are planning how to adapt our plants.

The MQB was used by the Audi and Volkswagen Passenger Car brands for the first time for the roll-out of the new Audi A3 and the production start of the new Golf. Another new development, the Modular Production Toolkit (MPB), transfers the modular concept from the vehicle to production. Standardized facilities and operating equipment are enhancing flexibility and profitability in existing structures. The modular systems enable the widest variety of models to be produced, including with different drive types and wheelbases. For example, multiple variants of the Golf can be manufactured in a single working day on one production line – the hatchback, the estate and the Golf Plus.

Use of the MPB will deliver additional efficiency gains when other models based on the MQB are rolled out. For example, the factories in Foshan and Puebla, which will also produce the Golf, will benefit from the standardized, proven modules.

In engine manufacturing, production of a new petrol engine and a new diesel engine family has started as part of the start of the MQB.

The Group’s production system

The “Volkswagen Way” works agreements signed at the end of 2007 laid the foundation stone for a long-term process of change in the corporate culture and a new common understanding at Volkswagen. The goal is a holistic development process for the Company on its way to becoming the leading automobile manufacturer in the world.

With the “Volkswagen Way”, we aim to improve our efficiency, productivity, quality, communication, cooperation, ergonomics and teamwork. We do this by permanently avoiding waste and by perfecting work methods. The focus is always on people. Thus, workplaces and workflows are – directly and indirectly – optimized in multiple steps using the CIP cascade (Continuous Improvement Process). Using workshops and the active participation of employees, we have already identified many solutions that have been further developed to create product or process standards. The Group’s value-driven, synchronous production system supplies the necessary methods and instruments for implementing the “Volkswagen Way”, improving quality and adherence to schedules while simultaneously reducing costs. Uniform Group standards and stable processes increase productivity and shorten throughput times. Training is an important way to approach this. To establish the standards for the long term, employees complete Group-wide training on the CIP cascade at lean and training centers. The logistics training center at VOLKSWAGEN SLOVAKIA, which only opened last year, has already won an award: the “Lean & Green Efficiency Award 2012” was awarded jointly by trade magazine “ATZproduktion” and consulting company “Growtth Consulting Europe” to the Bratislava plant for its lean and environmentally-friendly production. The main production facility in Wolfsburg also received an award. The successes of the “Volkswagen Way” associated with sustainably improving productivity and management processes were recognized by the “Automotive Lean Production Award 2012” from trade magazine “Automobil Produktion”. This year, we opened a training center for optimizing production and management processes at the main ŠKODA production facility in Mladá Boleslav. Continuously qualifying employees is an integral feature of our production strategy.

A new logistics concept for the Volkswagen Group, which is currently being implemented and continually enhanced, is designed to make supplies for production locations and the corresponding material and information flows even more efficient. The focus is not limited to the internal processes for providing materials to the assembly lines, but also includes the upstream transportation and logistics processes between us and our suppliers. It is primarily here where the Group’s different brands and plants can leverage potential synergies. These mainly result from smaller inventories, more stable processes, higher-quality information and more transparency.

E-traction in production

The upcoming start-ups of vehicles that are solely and partially powered by electricity represent challenges for production. As early as 2012, we looked at this topic intensively and made the corresponding preparations. The focus was on products designed with a view to production, integration onto the existing production lines and the training for employees.

The targets that already apply to the production of the Group’s hybrid vehicles were used, enhanced and factored into Volkswagen’s standardization process. Thus, they contribute to expanding the production system for electrically powered vehicles.

Extending technological expertise in warm forming

For several years now, the process of warm forming special types of steel has been an established method to manufacture the strongest crash-relevant body parts.

Volkswagen decided early on to produce its own press-hardened parts and is continuously driving forward technological development in terms of productivity and improving the characteristics of parts. The first two warm forming lines were successfully brought into operating at the Wolfsburg site in the past fiscal year to meet the growing demand for these types of parts in the product platforms.

Both furnace and tool technology were further optimized. The warm forming lines were built in a Y-configuration (two parallel furnaces and a press) to optimize the cycle time. In addition, the laser cutting that usually follows this has now been replaced in part by “warm cutting” in the metal forming tool. This saves energy and investment costs and also reduces the manufacturing time.

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