Share of total production 2011 in percent

Vehicle production locations of the Volkswagen Group (map)

In 2011, the Volkswagen Group expanded its production network and invested in the energy-efficient design of its plants. The continuous optimization of all processes in the direct and indirect areas is an important success factor for sustainable gains in the value we create. Thanks to the use of modular toolkits and the design of factories in which vehicles of several brands can be produced (multiple-brand plants), we will be able to meet local requirements even more efficiently in the future.

Production locations

The production network of the Volkswagen Group expanded by 31 facilities as a result of the acquisition of the majority stake in MAN SE. At the end of the reporting period it consisted of 94 sites, of which 54 produce vehicles. The sites are spread out over the continents of Europe, North and South America, Africa and Asia.

Our efficient production network is composed of vehicle and component plants that form an integrated group and cover predominantly regional needs. The effects of external factors such as currency fluctuations and customs duties can thus be kept to a minimum. Our assembly partners in Indonesia, Russia and Malaysia are also part of this global production network. These partners assemble vehicles on our behalf and are part of our concept for extending our production capacity.

The Volkswagen Group produced more than 8 million vehicles for the first time in 2011. We have created additional capacity in order to satisfy rising customer demand in the individual markets and to achieve our growth targets. Expansion into new markets is a significant element of our growth strategy and also benefits our component plants in Germany and the existing vehicle plants that deliver the components for local assembly of vehicles in these markets.

The Chinese market has developed into the largest automobile market in the world and it will continue to grow strongly. Together with our joint ventures, we want to participate in this dynamic growth over the long term. We have responded to trends in the market with the expansion of production capacity at our plants in Changchun, Nanjing and Chengdu, as well as the construction of the new vehicle sites in Yizheng, Foshan and Ningbo. The plant in Yizheng is projected to start production in 2012, and production in Foshan will start just a year later. The plant in Ningbo will start manufacturing vehicles in 2014.

The automobile market in North America is equally important. In the largest market of this region, the USA, we put our new vehicle plant in Chattanooga into operation in 2011. It is one of the most modern automotive plants in the Group as it meets the highest standards for sustainable and environmentally friendly production. At the same time it is a significant element of our overall strategy in the region, based on which we intend to achieve our long-term volume and profitability goals there. The factory requires about 35% less energy than comparable standard industry buildings. When completed, we will build 150,000 cars each year in Chattanooga and employ about 2,500 people.

A new engine plant is being built in the Mexican city of Silao with an annual capacity of 330,000 engines of the latest generation. Upon completion of the plant in 2013, it will form a regional production network together with the production sites in Puebla and Chattanooga, which will significantly strengthen our market position in North America. We will be able to increase our regional value added, while reducing cost and exchange rate risk.

The automotive market in India is one of the most important growth markets in the world. We have been present there with local production since 1999 at the ŠKODA assembly plant in Aurangabad. We thus entered the market prepared for the long term. Vehicles for Volkswagen Passenger Cars, Audi and ŠKODA are currently assembled in this plant. In addition, our modern vehicle plant in Pune, which came into operation in 2009, produces vehicles for the growing compact saloon segment. These two production sites form the basis from which we will profit from strong future growth in the Indian market.

We began local assembly of vehicles in Malaysia under a partnership-based business model in October 2011. The production volume over the next few years will grow steadily to about 30,000 vehicles per year. In addition to the production volume, we will also continue to raise the share of local value added in the near term.

We are continuing to expand our presence in the important Russian growth market. In order to increase our local production capacity there in the short term, our Russian partner, the GAZ Group, has been producing the first vehicles under contract to us since November 2011. The production volume there will increase to 100,000 vehicles per annum by 2013.

New start-ups and production milestones in 2011

Worldwide, during fiscal year 2011 the Volkswagen Group successfully implemented 30 new production start-ups, 17 of which were new products or successor products. A highlight was the start of production of the new Volkswagen up!, ŠKODA Citigo and SEAT Mii small cars. Volkswagen Passenger Cars started production at the new plant in Chattanooga of a version of the Passat designed especially for the US market. The successors to the Golf Cabriolet and the New Beetle were also important milestones in the production calendar. The Audi brand expanded its range of models by the Q3 and other vehicles. Bentley overhauled the Continental class with the GT and GT Cabriolet. The ŠKODA Rapid is another vehicle now produced entirely in the Indian city of Pune.

A number of other important production milestones for the Volkswagen Group were celebrated in the reporting period: for Volkswagen Passenger Cars and Volkswagen Commercial Vehicles, the 125 millionth vehicle of the combined brands rolled off the assembly line. The 25 millionth Golf hatchback and the ten millionth ŠKODA left our factories. Our plant in Emden produced its ten millionth vehicle in May. And in July, FAW Volkswagen celebrated production of its five millionth vehicle.

The Group’s production system

As part of the “Volkswagen Way”, we are continuing to optimize the processes and structures at all Volkswagen sites in Germany. In its first step, the “Learn to See” program calls for employees to identify any kind of waste, eliminate it in a lasting manner, and introduce new, more efficient processes to be established as standard. In the second stage, there were events which help improve internal department and cross-departmental cooperation. This system, which has a standard methodology and approach helps us make even further progress toward our goal of being a value driven, synchronous business. Another focus of our work on production processes and structure was the implementation of workshops that improve both productivity and ergonomics at the workstation in the areas of new product engineering, design and implementation.

In parallel with this, and as part of a new logistics plan, we are working to optimize the supply of components across the entire process chain – from the supplier to the assembly line. As a result of these efforts, processes were standardized across plants and brands, allowing greater synergies to be leveraged in the Group.

Thanks to systematic standardization, the modular toolkits developed by the Group give us the opportunity to implement a wide variety of vehicle and drive concepts with a minimum of effort using a uniform vehicle architecture. At the same time, the unit costs, one-time expenses as well as the production time for a new vehicle model can be significantly reduced.

In order to meet rising worldwide demand for vehicles, we are increasingly committed to production that can cover multiple vehicle classes and brands. This production approach – in conjunction with the use of modular toolkits – ensures that we can cost-effectively support the growing complexity of our model portfolio. Product standards, state-of-the-art production processes as well as integrated factory concepts create the conditions for this.

In the coming years, the MQB will form the basis for many of our Group vehicles. The Modular Production Toolkit (MPB) was developed for this reason. The core element of the MPB is far-reaching standardization: from operating equipment through facilities and production areas, down to the entire factory. Standardized elements are combined to form a growing number of new systems, achieving high levels of flexibility for the facilities. Production will thus be in a position in the future to produce different models of different brands in varying quantities at one plant, in one and the same facility. This allows the capacity of all plants in the Group to be optimally utilized.

One of our most important goals is to continually increase efficiency. We intend to raise our productivity by an average of 10% in both direct and indirect areas by systematically using the methods and instruments of the Group-wide production system.

Training centers are being established worldwide in order to train employees of the Group brands about the production processes. For example, Volkswagen Slovakia opened a new Center for Logistics in 2011. This training facility offers customized education in the logistics function for the first time in the Group. Additional training centers have been established at the Osnabrück plant and the Wolfsburg site.

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