Date: 21.08.2026
Future Plan: Volkswagen Group is Entering the Next Phase of Transformation
On this page, you can find the latest information on the future plan of the Volkswagen Group. The page will be updated as needed.
Volkswagen Group targets an 8–10% operating return on sales by 2030
Why does the Volkswagen Group need an operating return on sales of 8 to 10 percent by 2030? Rolf Woller, Head of Group Treasury and Investor Relations, explains how cost reduction, a lower breakeven point, structural efficiency and financial resilience can strengthen profitability in a challenging global automotive market.
Why an 8–10% operating return on sales is critical to the Volkswagen Group’s future
The return on sales measures the operating profitability of a company and shows how sustainable and viable a business model is. Currently, the Volkswagen Group’s return is around 4 percent - but the target is 8 to 10 percent by 2030. How is this target value derived? And why is a return on sales at this level necessary? In an interview Rolf Woller, Head of Group Treasury and Investor Relations, discussed these questions.
The Volkswagen Group recently presented its half-yearly figures: how do you assess the company’s current return on sales?
At 3.8 percent, we were below the previous year’s figure of 4.2 percent and below our forecast corridor of 4 to 5.5 percent for 2026 at the end of the six-month period. Although earnings power, i.e. the operating profit, appears to be impressively high at 5.9 billion euros, in terms of sales, however, we only earn an operating profit of 3.80 euros per 100 euros of sales. The financial result and taxes must be deducted from this. At the end of the six-month period, earnings after taxes stood at only 2 percent. For me, this shows once again how pressing and urgent the need for action is.
Although the reasons for the pressure on profits must be considered in the context of the market and competitive environment, it quickly becomes clear that in many cases we cannot influence them and that they are not temporary, but long-term. Regulation, tariffs and, in particular, the competitive pressure from China have lasting effects.
The return on sales
The return on sales – or operating margin – indicates how much profit a company generates from its operating business relative to sales. Here is a simplified example: a company earns 100 euros by selling its products (= sales revenue). After deducting all costs, a profit of 3.80 euros (= operating profit) remains before interest and taxes. This means the return on sales is 3.8 per cent, which corresponds to the Volkswagen Group’s return on sales in the first half of 2026.
However, the company is seeking to achieve a return of 8 to 10 percent by 2030. This is necessary in the long term so that the Group can invest in the future from its own resources.
How does the Volkswagen Group compare with the competition in this regard?
With a Group operating return on sales of 3.8 percent, we are below the average of 4.1 percent for the six-month period compared with other automotive groups. If we look at the return on sales of the automotive business, we are slightly better than many of our competitors at 4.1 percent. However, such comparisons are only of limited value, as it is not always evident from the outside how, for example, the costs for software or the battery business, investment results or holding costs are offset in the Groups between the segments.
However, one thing is clear: this is a structural earnings problem that has affected the entire automotive industry. No manufacturer can afford to operate at a level of return below the cost of capital on a continuous basis. And those are around 8 to 9 percent on average in the automotive industry. This is because the cost of capital reflects the return that investors, i.e. share and bondholders, expect for their willingness to finance our business. If our operating profit is continuously below this, we will not create value in the long term and will eventually erode our assets.
So that explains our target of increasing the operating return on sales to 8 to 10 percent by 2030?
The target is derived from two perspectives. From our investors' return expectations and from the competitive comparison. As already mentioned, the lower limit of the target corridor is based on the cost of capital of between 8 and 9 per cent. No investor will finance a business that does not cover the cost of capital in the medium to long term. To remain attractive to investors, we need to increase our return. The competitive comparison also shows that we are at the same level as our competitors with our target of 8 to 10 percent. Furthermore, the target corridor also describes an economic necessity - because we want to achieve this target by 2030, in other words, in four years' time.
A look back at the past shows how much can happen in such a period – from a pandemic to tariff conflicts to geopolitical crises. If you take into account the resulting risks for vehicle volumes and prices, it becomes clear that a deterioration of the currently achieved prices by one percentage point per year alone could cost 4 percentage points in the return on sales figure. The target corridor thus also provides us with a necessary buffer against unforeseeable events and increases the Group’s resilience.
How realistic is the target given the current market conditions?
The target is undoubtedly very ambitious, but it is realistic. A look at the past shows that returns of this magnitude are generally achievable: as a Group we recently achieved an operating return on sales of around 8 percent in 2021, albeit under different underlying conditions. Recent examples can also be found within the Group: Škoda achieved an operating margin of 8.5 percent in the first half of 2026. At the same time, it is true that some brands are still far behind their target returns for various reasons.
Given the market environment described, small improvements will therefore not be enough to achieve the target. It will require far-reaching structural changes. These include the reduction of duplicate work within the Group as well as the adjustment of production capacities and cost structures. In addition, the Group will need to be significantly streamlined to increase speed and efficiency. Focusing our product and variant offerings, as well as consistently reviewing of our investment portfolio. However, a factor that is just as important is that we systematically use our growth opportunities. Ultimately, the speed of implementation will be crucial: we cannot waste time and must act quickly and decisively now.
What are the most important levers for achieving a 8-10 percent return on sales?
From today’s perspective, the biggest lever is clearly on the cost side. Of course, the best combination would be lower costs with a simultaneously growing sales revenue. But we need to be realistic. The outlook for our most important sales markets in Europe, North America and China suggests stable market volumes at best in the coming years. Most recently, the Chinese market has collapsed by more than 20 per cent. This is why we cannot currently focus on growth to achieve our return targets. The key now is to significantly lower our breakeven point. Ideally, to below eight million vehicles. To achieve this, we need to work consistently on the largest cost items. The most important levers are firstly overhead costs, then direct material costs and expenditure on sales support measures. This is precisely where the largest direct contribution to earnings arises. In terms of selling, general and administrative expenses (SG&A) alone, which include overheads, we are 30 percent above the level of our competitors on average. Growth nevertheless remains very important – but we must view this as secondary lever, given the global economic prospects
The breakeven point
The breakeven point indicates the production volume or revenue which a company needs to operate profitably. The lower it is, the sooner costs are covered and profits are made.
A breakeven point of under eight million vehicles therefore means reducing costs to a level at which the Group can already break even with a production volume of less than eight million vehicles.