Review of Volkswagen’s 2012 Report

A. BackgroundIn 2012, the Global Car Market posted a significant 8.8% increase from last year, with the World’s Top 25 Markets positive 9.6%. It shows a very promising signal of the vehicle market. In 2012 Global Sales Top 10 brand, Volkswagen did an attractive job.

In December 2012, Volkswagen group global sold 784300 vehicles, in December 2011, the number was 649700, on the basis of increased by 20.7% year-on-year, that is ranked second after Toyota, to be motioned, Volkswagen achieved huge success in the main market, such as China, North America, South America, especially the flagging European market. As Japanese car dominates the global market now, how Volkswagen keep the high increase of sales arouses my interest.

B. About the reportThen I read the 2012 annual report of Volkswagen group global, as the report has 368 pages, I focus on the two part of the report, the first part is ‘Samba do Brasil ’, which talks about Volkswagen is an engine for Brazil in its boom years (P.40-45). The other part is the management report, value-Enhancing Factors (P.192-225)

C. Define the issuePart of ‘Samba do Brasil ’This part shows Volkswagen owns a big market in Brazil, and it also indicates how Volkswagen success, In my viewpoint, maybe Brazil is epitome of the global market in the future. a、 local brand advantage

The Volkswagen Gol and Beetle has accumulated an enormous fan in Brazil for over 20 years, also, today, around 24000 people work in Volkswagen’s four Brazilian plants. They produce 3500 vehicles and 3800 engines every day and currently sell 22 models, including the Gol, Voyage, Fox, Polo Sedan, Saveiro, Golf and the SpaceFox, these all made Volkswagen be a famous local brand in Brazil

b、 high local demandThe Brazilian middle class will have grown to 118 million in 2014, two-thirds of the total population, that’s creates stability and purchasing power, in the long-term context, the Brazilian market for passenger cars and light commercial vehicles could grow to over 5 million units per year.

Part of the management report, value-Enhancing FactorsThis part shows how Volkswagen increase the enterprise’s value in a sustainable way. a corporate social responsibility and sustainability  Volkswagen’s corporate social responsibility is to ensure that Volkswagen avoid risks at every step along the value chain,identify opportunities for development early on and improve its reputation.

b、 sustainability management

c、 Since 2006, the CSR has coordinated all activities within the Group and the brands, using standardized structures, processes and reports. It strategically aligns all CSR activities and acts as a guidance unit for internal management processes and dialog with stakeholders. Also, with introduction of the IT-based sustainability management system and the future integration of the KPI system, Volkswagen meet the increasing expectations of its stakeholders for an up to date CSR and sustainability performance.

d、 code of conduct guidelinesAll employees are equally responsible for adhering to these principles.

e、 Volkswagen in sustainability rankings and indices Volkswagen take its high position in many very important international rating and indices in 2012, such as Dow Jones Sustainability World Index, SAM, ASPI, ECPI and so on.

f、 focus of research and development activitiesResearch and development focused in particular on the ecological and economic alignment of vehicle portfolio. The Volkswagen Group has set itself the target of cutting the average CO2 emissions of its new European passenger car fleet to under 120 grams of CO2 per kilometer by 2015.

Another Volkswagen’s area of expertise is virtual technologies. In August 2012, the Volkswagen Group of America opened a state-of-the-art research and development center in California. Drive technologies and vehicles from several Group brands will be tested and optimized here. SKODA is adding 21 new engine and component test beds to its technology and development center which is one of the largest investments currently being made in development in the Czech Republic. g、 innovative products captivate our customers

The Volkswagen wins “Most Innovative Automotive Company”, “Best Manufacturer: Conventional Drives” and “Best Manufacturer: Vehicle Concepts” in fiscal year 2012.

h、 Key R&D figuresTotal research and development costs for fiscal year 2012 in the Automotive Division increased by 32.1% year-on-year. The capitalization ratio increased to 27.5%, research and development costs recognized in the income statement in accordance with IFRSs were higher than in 2011, this meant that their ratio to sales revenue in the Automotive Division remained unchanged at 5.1%.

i、 stable supply situation for procured components and raw materials Because the future increase in demand in all segments for vehicles, the need for procured component grew and changed. Volkswagen successfully safeguarded new vehicle start-ups based on the Modular Transverse Toolkit at the Audi, Volkswagen and SEAT brands. In additional to working together with suppliers, a cross-business task force, which is an established part of the crisis management.

j、 Developing new procurementThe measure Volkswagen to achieve cost target is implementing the Cost-Competitive Country Sourcing program to develop affordable procurement markets.

D. AnalysisThrough reading these parts of report, we can find that Volkswagen is now facing a very promising situation and it may keep its position by followingthe principle, however, how to balance the global market, distribute the resource, capital to achieve the maximum revenue is my concerning issue.