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 8.3 million vehicles, global vehicle production in fiscal year 2021 was 7.0 % down on the prior-year figure, which had been affected by national measures to contain the Covid-19 pandemic. Productivity increased by 1.1 % year-on-year.
Although most of the restrictions and measures taken in response to the pandemic were lifted during the reporting period and factories were able to operate in compliance with hygiene protocols and other Covid-19-compliant codes of conduct, semiconductor production for key supplier parts had a comparatively slow start. Shortages of market capacity in the semiconductor industry coupled with brisk demand in the consumer goods, IT and telecommunications sectors led to supply bottlenecks and consequently restricted our production. The situation was further exacerbated by extraordinary events such as snowstorms in Texas in early 2021 and pandemic-related closures of semiconductor plants in Southeast Asia starting in June 2021.
To maintain production processes amid the pandemic conditions and protect our employees, we continuously review the behaviors and measures developed as part of our Safe Production Initiative so as to prevent possible chains of infection between the people working in the network and adjust them if necessary.
“one.PRODUCTION” production strategy
Production is supporting the new Group strategy NEW AUTO with its “one.PRODUCTION” functional area strategy, which was also recently developed. 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. The production strategy is guided by our five strategic goals:
With these strategic goals we have created content clusters in which 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. We want to ensure that our sites remain competitive by having our factories work at optimal capacity, enabling us to manufacture high-quality products that give customers maximum benefit at competitive prices.
Global production network
The Group’s production network encompasses 120 production sites, including our Chinese joint ventures. 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.
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, SEAT, Audi and Porsche brands.
With its new Group strategy NEW AUTO, the Volkswagen Group has set itself the goal of developing sustainable, connected, safe and tailored mobility solutions for future generations and accelerating the Group’s realignment from vehicle manufacturer to a leading, global software-centric mobility provider. 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. Furthermore, we use an all-electric platform for premium and sports brands – the Premium Platform Electric (PPE) – to leverage synergies across brands in production.
The acquisition of Navistar increased the Volkswagen Group’s global production network to 120 sites in which passenger cars, commercial vehicles and motorcycles, as well as powertrains and various components are manufactured. With 63 factories, Europe remains the center of production activities, and the importance of the Asia-Pacific region is underpinned by 34 sites.
The effects of the Covid-19 pandemic and the additional global supply bottlenecks, especially for semiconductors, caused headwinds for starts of production in the past fiscal year. The Volkswagen Group nevertheless succeeded in starting up 64 vehicle projects, 26 of which were new products and successor products and 38 were product upgrades and derivatives.
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 is to simplify the entire process chain and make the best possible use of new technologies. Fields of innovation in 2021 were computer vision, augmented reality and process mining.
Based on Volkswagen’s proprietary computer vision platform, artificial intelligence is being used for complex label inspections, among other things, and implemented across brands at the Group’s sites. Here, for example, the correct positioning and possible damage to the vehicle’s name plate are checked. In addition, augmented reality technology (which links the virtual world with the physical world), particularly through the use of the output medium of data glasses, is being tested in initial pilot projects in employee training and in remote support and collaboration.
This lays the technical and IT-specific foundations for Group-wide use in production. Work is being done on the use of process mining (visualization and systematic evaluation of IT-based processes in their entirety) so that overarching production and logistics processes can be digitally mapped and better understood. Initial fields of application in process mining are being worked on together with Group Logistics and individual sites. At the Kassel site, for example, the causes of faults in exhaust systems are being identified to increase plant efficiency and reduce resource requirements.
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. Further production sites were linked up to the DPP and equipped with the first applications developed in-house for improving production and logistics. 2021 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. Moreover, collaborative work is being done on predictive maintenance applications (predictive, proactive technology for maintenance and servicing) as well as data analytics functions for analyzing and comparing cross-plant processes.
The Volkswagen Group consciously harnesses the innovative power generated by our continuously growing innovation ecosystem. The Group’s open innovation platform provides the central point of contact for start-ups and other innovative companies to work together on new solutions and concepts for production.
With the Industrial Cloud, the Volkswagen Group is going one step further and establishing an open ecosystem based on DPP together with Amazon Web Services (AWS) and integration partner Siemens, in which IoT (Internet of Things) and data analytics solutions will be made available for a more efficient and transparent value chain in the future. The Industrial Cloud community already had over 15 industrial partner companies in 2021.
GoTOzero Impact Factory
We are planning the production of tomorrow with our “one.PRODUCTION” functional area strategy. Emissions levels and the use of resources at Volkswagen Group sites require particular attention. The goTOzero Impact Factory program is developing specific steps toward production that has no adverse environmental impact with an underlieing vision of creating a factory that has no adverse environmental impact.
We have developed a checklist to help the plants determine the status of their progress on their path to becoming a “Zero-Impact Factory”. This currently comprises 143 environmental criteria and provides the basis for the continuous reduction of energy consumption and CO2 emissions, for example.
To implement such and other programs, a management system will be introduced at all production sites worldwide, linking the main compliance issues with environmental management. This environmental compliance management system (ECMS) provides a solid foundation for compliance with all external and internal rules and regulations relating to the environment within the context of production processes.
We implemented the ECMS in the first Group companies in 2020 and rolled it out to others in 2021. This process is being actively supported, monitored and tracked.
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 another IT system and make these available for a Group-wide exchange of best practices. In the reporting period, around 1,544 implemented measures in the area of environment and energy were tracked and documented in this system 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 are beneficial from an environmental and often also from an economic perspective as well as having a positive effect on the Group’s environmental indicators.
GoTOzero Impact Logistics
In the joint “goTOzero Impact Logistics” initiative, Group and brand logistics departments 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 future carbon-neutral logistics 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 in collaboration with Deutsche Bahn AG.
Specific examples of the use of the railways as a low-emission mode of transport are the delivery of battery modules to Braunschweig from the supplier in Wrocław, Poland, and the transport of battery systems from the component site in Braunschweig to the Zwickau plant in order to produce completely battery-electric vehicles.
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. 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 at least 85 % less CO2 than conventional fossil fuels.