Porsche 2011 Annual Report Download - page 120

crisis, Volkswagen offered dealers financing on at-
tractive terms via its financial services companies
with the aim of reducing the risk of their insolvency.
The Volkswagen group also established a risk man-
agement system so that it can promptly counteract
liquidity bottlenecks that could hinder smooth busi-
ness operations.
The provisions of the new Block Exemption
Regulation, which have been in force for after-sales
service since June 2010, as well as the amendments
included in EU Regulation 566/2011 dated 8 June
2011 expanding independent market participants’
access to technical information, mean that Volks-
wagen may be exposed to increased competition in
the aftermarkets.
The European Commission is planning to end
design protection for visible vehicle parts. If this plan
is actually implemented, it could adversely affect the
Volkswagen group’s genuine parts business.
Research and development risk
The Volkswagen group combats the risk of
failing to give its customers’ requirements adequate
consideration during the development process by
conducting extensive trend analyses, customer sur-
veys and scouting activities. Taking these measures
ensures trends can be recognized at an early stage
and their relevance for customers verified in good
time.
There is also a risk that it may not be possi-
ble to develop products or modules within the speci-
fied timeframe, to the required quality standards, or
in line with cost specifications. To avoid this risk, the
progress of all projects is monitored continuously
and systematically and regularly compared with the
original targets. In the event of deviations, appropri-
ate control measures are initiated in good time. In
addition, the end-to-end project organization supports
effective cooperation among all areas involved in the
process. It incorporates specific requirements into
the development process as early as possible and
plans their implementation in good time.
The Volkswagen group’s wide variety of re-
search and development activities means that risks
are not concentrated on particular patents or licenses.
Procurement risk
Because unit sales figures in the automotive
industry have been rising worldwide, there has been
a significant recovery overall in the economic situa-
tion of suppliers. Thanks to the above-average in-
creases in unit sales recorded by the group brands,
the Volkswagen group’s suppliers have also benefited
from this trend. Nevertheless, procurement risk
management focuses its work on prevention. In
addition, Volkswagen continuously monitors suppli-
ers’ economic stability. If there is evidence of nega-
tive developments, appropriate measures are taken
to reduce risks and ensure supplies. To date, this has
enabled supply risks due to supplier defaults to be
effectively avoided.
Not only the high demand for group vehicles
presented challenges in the reporting period, but
also the trend toward models with higher-quality
equipment features in combination with sometimes
significant changes in installation rates. Many suppli-
ers increased volumes above and beyond what was
originally agreed and worked to the limit of their
capacity in order to meet the Volkswagen group’s
requirements. Increased and changing material re-
quirements were met and the group succeeded in
supplying procured components to all component
and vehicle plants.
GROUP MANAGEMENT REPORT120