“Strong Finances
Are Paramount”

Interview with Dr. Arno Antlitz, Finance and Operations, Volkswagen AG Board of Management


Dr. Arno Antlitz at the Volkswagen headquarters in Wolfsburg. As the member of the Board of Management in charge of Finances and Operations, he is a driving force behind the transformation at Volkswagen.Porsche Consulting/Max Arens

A friend­ly demeanor, an author­i­ta­tive pres­ence: Dr. Arno Antlitz is respon­si­ble for finance at one of the world’s largest cor­po­ra­tions, Volk­swa­gen AG. In an exclu­sive inter­view with Porsche Con­sult­ing Mag­a­zine, Antlitz talks about finan­cial sus­tain­abil­i­ty, the huge trans­for­ma­tion process­es tak­ing place in the auto­mo­tive world, and deal­ing with risks. He sees new oppor­tu­ni­ties in the region, but new com­peti­tors for the Group as welland also gives us a look into the con­tents of his wal­let. At present, his chief con­cern is how to tar­get and fill the most attrac­tive prof­it pools in the ongo­ing trans­for­ma­tion of the Group. 

Dr. Antlitz, let’s start with a personal question: how much cash do you have in your pocket right now?

Actu­al­ly, I’ve switched to pay­ing with my phone when­ev­er pos­si­ble. I’m increas­ing­ly short on cash (laughs). Park­ing meters can some­times be a prob­lem. For­tu­nate­ly, cash­less pay­ment options are becom­ing more com­mon. That’s the way of the future, I think.

And what would your answer be as CFO of Germany’s largest corporation?

Well, net liq­uid­i­ty is a good per­for­mance indi­ca­tor in the auto­mo­tive indus­try. And it’s hov­er­ing around 40 bil­lion euros. That’s very good news for Volkswagen—for all the employ­ees and also for us as board mem­bers. Solid finances like that give us the back­ing we need to mas­ter the trans­for­ma­tion going on in our indus­try right now.

But money keeps losing value. People are really concerned about inflation. Does a company like Volkswagen feel its effects too?

Of course we’re affect­ed by infla­tion. We see it espe­cial­ly on the mar­kets for raw mate­ri­als and ener­gy, and are try­ing to com­pen­sate as much as pos­si­ble. We’ve always worked on our costs, and will keep doing so. That’s also our responsibility—not least of all to our cus­tomers. After all, our high-vol­ume brands stand for mobil­i­ty that’s not only attrac­tive but also afford­able. I myself, how­ev­er, am large­ly opti­mistic that infla­tion will set­tle down toward the end of the year. By “set­tle down” I don’t mean go back to zero. Infla­tion of around 2 or 3 per­cent would be a rea­son­able cor­ri­dor for 2024.

At the board’s office on the top floor of the corporation’s headquarters: Dr. Antlitz talks with Porsche Consulting’s Federico Magno (right), Executive Director Mobility, and Jan Boris Wintzenburg, Director Communications and Marketing.Porsche Consulting/Max Arens

You’ve just mentioned the transformation in the automotive industry, which Volkswagen is also going through. Are the associated investments and write-offs of a magnitude that might make a finance head nervous?

I feel the oppo­site of ner­vous. It’s incred­i­bly moti­vat­ing to steer the finan­cial side of a large cor­po­ra­tion like Volk­swa­gen on the road to elec­tric mobil­i­ty and dig­i­tal­iza­tion. We’re one of the biggest com­pa­nies in the world. Our com­mit­ment to car­bon-free mobil­i­ty there­fore means we have a lot of influ­ence. We’re play­ing a major role in decar­boniz­ing the entire indus­try and help­ing to make sure that life on our plan­et remains worth living.

But the challenges are enormous …

We have a lot of excit­ing brands—Volkswagen, Audi, and Porsche, but also Škoda and Cupra—and in addi­tion, we’re set­ting up trans-brand plat­forms for soft­ware and bat­ter­ies as well as for mobil­i­ty in gen­er­al. Taken togeth­er, we can cover an extra­or­di­nary range of mar­ket seg­ments while also gen­er­at­ing scale effects. Then there are the advan­tages we just men­tioned of high net liq­uid­i­ty lev­els and a solid bot­tom line. On top of that, we have excel­lent teams. When I con­sid­er these fac­tors, I don’t see a need for us to be ner­vous. On the con­trary. We can tack­le this trans­for­ma­tion with con­fi­dence, and ini­ti­ate changes from a posi­tion of strength. We have the chance to be one of the most suc­cess­ful com­pa­nies on the market.

“Transform and perform” is a great way of describing the challenge. Despite the limited resources you’re calling on the company not only to transform but also to increase its efficiency and make its supply chains more resilient. How much internal resistance do you have to overcome?

That’s a good sum­ma­ry, thank you. And pre­cise­ly that is the main job of a CFO. At the end of the day we have to be sure we can pay for the trans­for­ma­tion on the strength of our own oper­a­tions. The short-term issue is cash flow. That means man­ag­ing prof­it mar­gins, costs, rev­enues, and pro­duc­tiv­i­ty. Porsche Con­sult­ing is also very strong in this area. You’re help­ing us here, along with a lot of other clients around the world.

And how do you know you’re putting enough into long-term investments?

From now to 2030 we’ll be mov­ing from a world with just one prof­it pool, name­ly com­bus­tion drive sys­tems, to a world with three dif­fer­ent prof­it pools. We’ll still have com­bus­tion engines, but elec­tric mobil­i­ty will become increas­ing­ly impor­tant as well. And then there will also be soft­ware-based ser­vices. Dif­fer­ent approach­es will be need­ed to man­age these three prof­it pools. To keep com­bus­tion-dri­ven cars com­pet­i­tive in a mar­ket whose vol­ume is essen­tial­ly being cut in half, we’ll have to increase model effi­cien­cy. So here we’ll be focus­ing on pro­duc­tiv­i­ty and cost man­age­ment, because the scale effects are dis­ap­pear­ing. And the issue for elec­tric vehi­cles is how to suc­cess­ful­ly ramp them up in a mar­ket that con­tin­ues to show high lev­els of growth.

“We want to keep an even stronger hold on value creation in the future,” says Antlitz.Porsche Consulting/Max Arens

“Ramp up electric vehicles”—that sounds almost relaxed. But all kinds of crazy factors are in play. The raw materials market is in a frenzy right now as demand escalates and prices double or triple—how can you keep that under control?

When it comes to the future costs of raw mate­ri­als, there are two levers. One is to safe­guard, or hedge. There are some mate­ri­als you can hedge, like nick­el, and we’ve done that very suc­cess­ful­ly. The big­ger lever, how­ev­er, is to enter raw mate­r­i­al sup­ply chains our­selves, which means keep­ing a stronger hold on value cre­ation. Last year we launched Pow­er­Co, for exam­ple. It’s a start-up, albeit a large one, that will han­dle our world­wide bat­tery activ­i­ties. One of its tasks is to build cell fac­to­ries. What’s every bit if not more impor­tant, how­ev­er, is to secure the raw mate­ri­als for these bat­ter­ies. We’ve start­ed a joint ven­ture with Umi­core, a mate­ri­als tech­nol­o­gy cor­po­ra­tion based in Bel­gium, to pro­duce cath­ode mate­ri­als for our Euro­pean bat­tery plants. And we’ve signed a mem­o­ran­dum of under­stand­ing with the Cana­di­an gov­ern­ment with the aim of strength­en­ing raw mate­r­i­al sup­ply chains in the North Amer­i­can region. There’ll be more such activ­i­ties in the future.

How important is it to meet the criteria for environmental, social, and corporate governance—in other words, ESG?

It would be hard to over­state the impor­tance of ESG and that’s a key part of our strat­e­gy. As the board mem­ber in charge of finances, I’m espe­cial­ly inter­est­ed in hav­ing good rat­ings. We’ll have to refi­nance our­selves annu­al­ly to the tune of tens of bil­lions of euros over the medi­um term—which makes a good ESG rat­ing all the more important.

Does a corporation like VW have to get more deeply involved in raw material chains these days? After all, it didn’t use to have holdings in steel works or aluminum mills.

We’re still not inter­est­ed in steel works hold­ings. Invest­ment in stronger ver­ti­cal inte­gra­tion, like the bat­tery sec­tor, should always be done on a very, very selec­tive basis. You can only spend each euro once. At the end of the day, we have to make sure that Volk­swa­gen has solid and robust finances at any given point in time. That is a pre­req­ui­site for mak­ing this trans­for­ma­tion work.

In short, a company like Volkswagen should never stand on shaky ground?

Absolute­ly! Strong finances are para­mount. Also and espe­cial­ly in a transformation.

“We’re not going to build new plants for electric vehicles in Europe, but instead transform the ones we already have,” says Antlitz.Porsche Consulting/Max Arens

The combustion engine business is on its way out. Will you be having to write off whole factories?

We’re using strong rev­enues from the com­bus­tion sec­tor to pay for ramp­ing up our activ­i­ties in the elec­tric sec­tor. That’s the oppo­site of writ­ing things off. Our strat­e­gy is to con­vert our fac­to­ries one at a time. We’re not going to build new plants for elec­tric vehi­cles in Europe—instead, we’ll be trans­form­ing the ones we already have.

Stellantis, the parent company of FIAT, is banking on factories that work for multiple brands. Is that a feasible approach for Volkswagen too?

We hold a very impor­tant asset for the trans­for­ma­tion. And that is the MQB, the mod­u­lar trans­verse matrix for com­bus­tion vehi­cles. When the MQB was launched in 2012, it was crit­i­cized because of the very high invest­ment costs. But the gold­en age of the MQB is yet to come. Why is that? Because all the invest­ments have been made and the MQB com­bus­tion plat­form is absolute­ly com­pet­i­tive in its prod­uct sub­stance. We’ll equip it with bet­ter soft­ware and use it for anoth­er gen­er­a­tion of cars—when com­bus­tion dri­v­e­lines are being phased out. At lower costs, of course, and with suf­fi­cient flex­i­bil­i­ty to bring reduced vol­umes of com­bus­tion vehi­cles togeth­er on a trans-brand basis at MQB plants.

So you’re reaping the natural dividends from previous investments in the MQB platform?

Not just div­i­dends but real money. The MQB also gives us a cru­cial cost advan­tage for the phase we’re in now. The same is true for elec­tric cars, for instance at Zwick­au, where we’re con­sol­i­dat­ing dif­fer­ent vehi­cle projects at a sin­gle plant. It’s very impor­tant to note that this doesn’t mean the cars will become more sim­i­lar for our cus­tomers. On the con­trary! We’re using the funds there­by freed up to define our brands even more sharply. If you com­pare a Škoda Enyaq, a VW ID.4, and an Audi Q4 e‑tron, you’ll see that those are very dif­fer­ent cars.

What does resilience mean for Volkswagen?

Resilience is a key con­cept in today’s world. I’ll start with oper­a­tional resilience. For years now, we’ve been opti­miz­ing the per­for­mance of our sup­ply chains. With sin­gle sourc­ing and just-in-time meth­ods, we’ve designed our sup­ply struc­tures for the great­est pos­si­ble effi­cien­cy. How­ev­er, we’ve entered a peri­od of increas­ing uncer­tain­ty, which means we have to focus much more on resilience. That in turn means high­er costs. But we can com­pen­sate for the costs with bet­ter plan­ning cer­tain­ty and greater flex­i­bil­i­ty. Resilience also means mak­ing your­self less depen­dent on req­ui­site sales vol­umes or in other words, low­er­ing your break-even point.

Does that mean cutting back on globalization?

We have to make sure we’re aware of the con­se­quences. Glob­al­iza­tion, which means spread­ing labor through­out the world, has led to enor­mous increas­es in pros­per­i­ty. If the world now pulls back and makes many dif­fer­ent and small­er invest­ments instead of fewer larg­er ones—or in other words, if it loses its scale effects—then pro­duc­tion will become more expen­sive and cus­tomers will have to pay more. The gains in pros­per­i­ty we’ve seen in the past will ulti­mate­ly no longer be pos­si­ble. The pri­ma­ry goal for us as a glob­al com­pa­ny, there­fore, has to be pro­mot­ing an open and glob­al­ly net­worked world. But at the same time, we can’t be naïve and we need to pre­pare for new risks.

Looking to India: “In my view, India has tremendous growth opportunities,” says Antlitz.Porsche Consulting/Max Arens

And how do you do that?

That brings me to the sec­ond type of resilience, name­ly strate­gic resilience, which is also impor­tant. We, the Volk­swa­gen cor­po­ra­tion, are very strong in Europe and China and we want that to con­tin­ue. But we have con­sid­er­able room for growth in the USA. In a world where geopo­lit­i­cal frame­work con­di­tions are becom­ing ever more chal­leng­ing and reg­u­la­to­ry land­scapes ever more com­plex, we espe­cial­ly need to strength­en our third pil­lar in the Unit­ed States. Maybe not only there. We’re also look­ing at India, in order to estab­lish a much more robust posi­tion in that new world. In my view, India has tremen­dous growth oppor­tu­ni­ties. In order to be truly resilient, we have to take an even more glob­al approach.

We haven’t talked about software. Does Volkswagen really have to develop it itself?

Keep­ing the soft­ware in our own hands is cru­cial if we want to keep deter­min­ing how cars will func­tion and to stay out in front in terms of data. But that doesn’t mean we can’t work with other com­pa­nies. I’m talk­ing very specif­i­cal­ly about set­ting up our auto­mo­tive soft­ware sub­sidiary CARIAD and its soft­ware plat­form. We’re eval­u­at­ing our strat­e­gy here right now. It’s clear that we have to devel­op and own most of the soft­ware our­selves. But that doesn’t stop us from work­ing with part­ners. The goal is to offer our cus­tomers the best pos­si­ble over­all pack­ages for rea­son­able prices at the ear­li­est points in time. That’s why we’re also count­ing ever more on the exper­tise of our partners.

What are the benefits?

Essen­tial­ly, it’s a mat­ter of the prof­it pools from dri­ver­less vehicles—from mobil­i­ty as a ser­vice and from soft­ware-based ser­vices. They’re still in their early stages, but we’re expect­ing the rev­enues to start flow­ing from small yet sig­nif­i­cant flag­ship projects in 2025, and then for prof­itable ser­vices to emerge and grow rapid­ly as of 2030—with high sales in both the ship­ping and pas­sen­ger sec­tors. But cus­tomers, too, will enjoy new oppor­tu­ni­ties. For exam­ple, I love ski­ing. Imag­ine a world in which you can get into your car Fri­day evening and wake up the next morn­ing at a ski resort after a good night’s sleep. I per­son­al­ly would be an extreme­ly strong poten­tial cus­tomer for this type of ser­vice (laughs).

So you’re not abandoning the field to Amazon, Google, Apple and the like?

We want to devel­op the soft­ware our­selves. But with intel­li­gent part­ner­ing strategies.

What are the biggest unknowns in your calculations right now?

That’s sure­ly the ques­tion of how the econ­o­my will devel­op. We’re in an indus­try that’s cur­rent­ly strong­ly impact­ed by sup­ply short­ages. Nei­ther we nor other man­u­fac­tur­ers can make and sell as many cars as our cus­tomers would like. We can­not rule out the pos­si­bil­i­ty of a slow­down in the econ­o­my and a weak­en­ing of demand. We’re prepar­ing for this accord­ing­ly. At the same time, we’re expect­ing the world­wide sup­ply of semi­con­duc­tors to improve in 2023. That means a com­bi­na­tion of reduced demand and improved sup­ply. We shouldn’t then fall back into the old pat­tern of offer­ing dis­counts. We have to main­tain dis­ci­pline in our pricing.

Will competition get tougher because other major carmakers take a different strategy and say they won’t invest in software themselves but rather draw on the services of Google or Apple in order to make their finances more flexible?

That’s pos­si­ble, but the reflex shouldn’t be to hold back on future invest­ments just because that’s what com­peti­tors are doing. There have always been phas­es when the focus was on costs, and then phas­es that empha­size the over­ar­ch­ing strat­e­gy and growth. Right now both are impor­tant. That’s a real chal­lenge for a com­pa­ny. You can always pur­sue a sin­gle goal well, but it’s hard­er when you have more than one. That, how­ev­er, is exact­ly what hap­pens in a transformation.

I’m picturing the legendary rally driver Walter Röhrl—hurtling over rough ground at maximum speed with one foot on the gas and the other on the brake.

Our aim is to save money on the one hand, and to spend or invest it on the other. The com­pa­nies that are best able to pur­sue these goals simul­ta­ne­ous­ly will emerge from the trans­for­ma­tion in the best shape.

Applying brakes to the front axle and power to the rear—while taking curves smoothly?

I’ll have to think about whether that works (laughs).

Walter Röhrl is more of an expert here than we are. But it’s true we’re in an unusual time …

… an unusu­al time also because dif­fer­ent parts of the com­pa­ny are affect­ed in dif­fer­ent ways. Some need to become lean­er, or down­size con­sid­er­ably, where­as oth­ers have to grow. That can gen­er­ate ten­sions with­in the com­pa­ny, which have to be man­aged with the help of com­mu­ni­ca­tions, train­ing, and trans­for­ma­tive programs.

Born in 1970, Dr. Arno Antlitz studied industrial engineering and earned a doctorate in economics. After starting his career in 1999 at the McKinsey & Company management consultancy, he joined the Volkswagen Group in 2004.Porsche Consulting/Max Arens

How do you get the employees on board for a journey of this type?

You have to keep telling every­one involved that the employ­ees who are cur­rent­ly work­ing on cars with com­bus­tion engines are the ones who are fund­ing the trans­for­ma­tion. That is an impor­tant, chal­leng­ing, and essen­tial job. And because we’re pro­tect­ing all jobs until 2029, no one has to worry about their future.

Do you envy companies like Tesla or BYD, which are entering the new world of mobility from scratch and don’t have to transform themselves?

It’s true that the new com­peti­tors enjoy a cer­tain oppor­tu­ni­ty by virtue of not hav­ing to restart any­thing. But on the other hand, they have to scale up from the begin­ning and build infra­struc­tures for pro­duc­tion, sales, after­sales, and financ­ing, in order to become truly rel­e­vant. We make ten mil­lion cars a year. We have the busi­ness process­es for ten mil­lion cars. We have the sales orga­ni­za­tion for ten mil­lion cars. What we have to trans­form, the new com­peti­tors first have to build up. They have to start up fac­to­ries and devel­op process­es for replace­ment parts, and it’s just as hard for them to get raw mate­ri­als as it is for us. Both of these paths have their chal­lenges. And if we are thor­ough in trans­form­ing our­selves, we’ll be in a very, very good posi­tion to keep pace with our competitors—or even exceed them.

What is your favorite thing to spend money on as CFO?

Future-ori­ent­ed projects like ramp­ing up our bat­tery plants and increas­ing our soft­ware activ­i­ties, and espe­cial­ly expand­ing our world­wide pres­ence. Our plan­ning up to 2026 calls for invest­ing 159 bil­lion euros, of which 56 per­cent will already be going into future-ori­ent­ed fields. And you can be sure the ratio will shift even more toward the future in the years to come.

And what do you like spending money on as an individual?

The best thing is on gifts for fam­i­ly and friends—like recent­ly at Christ­mas. It’s a real plea­sure to give gifts.

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