Volkswagen Group and CGI deepen global collaboration

Rhea-AI Summary

Volkswagen Group and CGI (TSX: GIB.A, NYSE: GIB) announce the deepening of their global collaboration through the launch of MARV1N, a new development unit for Group-wide digitalization projects. This initiative aims to strengthen Volkswagen's IT infrastructure and accelerate software development processes.

By 2026, Volkswagen plans to modernize its IT system landscape by replacing hundreds of legacy systems with more powerful, scalable solutions. The collaboration through MARV1N, a wholly-owned subsidiary of CGI Germany, will focus initially on Technical Development projects, particularly accelerating data-driven function development for new vehicle projects.

The partnership is expected to enable faster processes, reduce IT-related operating costs, and ensure knowledge retention within Volkswagen through dedicated teams working exclusively on Group projects. A key initiative includes developing a cross-company IT system to consolidate electrical/electronic architecture and software functions data, aimed at accelerating software updates and digital products development.

Positive

• Strategic partnership to modernize and streamline IT infrastructure by 2026
• Expected reduction in IT-related operating costs
• Exclusive dedication of MARV1N teams to Volkswagen projects ensuring knowledge retention
• Development of centralized data management system for faster software updates

Negative

• Significant IT legacy system replacement indicates current infrastructure inefficiencies
• Heavy dependence on external partner for critical IT infrastructure development

Insights

Technology Strategy Analyst

This strategic partnership marks a pivotal expansion of CGI's enterprise-level service portfolio, particularly significant for shareholders as it represents a high-value, long-term revenue stream through the newly created MARV1N subsidiary. The exclusive nature of the partnership with Volkswagen Group, one of the world's largest automakers, provides CGI with several strategic advantages:

• Recurring Revenue Stability: The dedicated development unit model ensures a steady, predictable revenue flow, highly valued in the IT services sector
• Strategic Positioning: This positions CGI as a key player in the automotive industry's digital transformation, potentially opening doors to similar partnerships with other manufacturers
• Knowledge Accumulation: The deep integration with VW's core processes creates valuable intellectual property and industry expertise that can be leveraged across CGI's global operations

The partnership's focus on modernizing VW's IT infrastructure, particularly the consolidation of legacy systems by 2026, represents a multi-year engagement that could significantly impact CGI's revenue growth. The emphasis on Technical Development and data-driven function development aligns with high-margin, specialized services that typically command premium pricing in the IT consulting sector.

For CGI investors, this partnership demonstrates the company's ability to secure transformative deals with major global enterprises, potentially setting a precedent for similar arrangements with other automotive manufacturers undergoing digital transformation. The creation of a dedicated subsidiary also suggests a strategic evolution in CGI's business model, moving beyond traditional consulting to more integrated, long-term partnership structures that could provide enhanced shareholder value through stable, recurring revenue streams.

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• Partners initiate development unit for Volkswagen Group-wide digitalization projects
• Goal is fast and efficient software development for new IT systems at Volkswagen
• Board Member at Volkswagen Group for IT, Hauke Stars: "Collaboration is a further step to secure the increasing demand for software development performance in the Volkswagen Group"

MONTRÉAL, Quebec and WOLFSBURG, Germany, Feb. 17, 2025 /PRNewswire/ - The Volkswagen Group and CGI (TSX: GIB.A) (NYSE: GIB), one of the world's largest business and IT consulting firms, announce the deepening of their global collaboration. This move strengthens the Volkswagen Group's long-term capabilities to further expand a powerful IT infrastructure for the future. As part of their joint efforts, both partners have launched the new entity MARV1N (pronounced "Marvin") which will act as an international development unit for Group-wide digitalization projects and support the developers at Volkswagen. With these additional resources, the Volkswagen Group plans to develop new IT systems faster and more efficiently.

The Volkswagen Group is advancing the modernization of its IT system landscape. By 2026, the company aims to replace hundreds of legacy systems with fewer but more powerful and scalable new developments across the Group. This is expected to enable faster processes and significantly reduce IT-related operating costs. To achieve this goal, Volkswagen Group is strengthening its software development capabilities. This is primarily being done through the consistent expansion of its international subsidiaries and through new cooperation models with selected partners.

"For the development and production of modern products, we need modern IT systems. At the Volkswagen Group, we are therefore working on our system landscape of the future: powerful, cross-brand, and scalable", said Hauke Stars, Board Member at Volkswagen Group for IT. "Our deepened collaboration with CGI is a further step to secure the increasing demand for software development performance in the Volkswagen Group."

Therefore, CGI and Volkswagen Group are initiating the entity MARV1N as a wholly-owned subsidiary of CGI Germany.

"Through this strategic partnership, we will further deepen our strong relationship with Volkswagen as we collaborate to accelerate Volkswagen Group's business outcomes in line with their digitalization vision and strategy," said François Boulanger, CGI President and CEO. "As part of this new strategic partnership, our software architects, developers and consultants will deliver services and solutions grounded in both technology expertise and knowledge of manufacturing business processes. We look forward to bringing CGI's proven best practices, global capabilities and technology innovation to this new joint initiative."

Volkswagen expects several benefits from this cooperation model. MARV1N employees will dedicate their software expertise exclusively to projects within the Volkswagen Group, accelerating development processes. Additionally, by working intensively and long-term on these projects, the teams will acquire a deep understanding of the core processes and software products within the Volkswagen Group. Through close integration of the teams, Volkswagen ensures the retention of this know-how within the company.

The MARV1N teams are initially focusing on projects related to Technical Development at Volkswagen, which is a key area in the ongoing digitalization push in the Group. Their primary goal is to accelerate data-driven function development for new vehicle projects. For instance, a new cross-company IT system is being designed to consolidate data of all requirements related to electrical/electronic architecture and software functions, spanning from pre-series development to after-sales service. This central data management approach is expected to lead to faster development times for software updates and new digital products, such as Functions on Demand, for Volkswagen's customers.

About the Volkswagen Group
The Volkswagen Group is one of the world's leading car makers, headquartered in Wolfsburg, Germany. It operates globally, with 114 production facilities in 19 European countries and 10 countries in the Americas, Asia and Africa. With around 684,000 employees worldwide, the Group's vehicles are sold in over 150 countries. With an unrivalled portfolio of strong global brands, leading technologies at scale, innovative ideas to tap into future profit pools and an entrepreneurial leadership team, the Volkswagen Group is committed to shaping the future of mobility through investments in electric and autonomous driving vehicles, digitalization and sustainability. In 2023, the total number of vehicles delivered to customers by the Group globally was 9.2 million (2022: 8.3 million). Group sales revenue in 2023 totaled EUR 322.3 billion (2022: EUR 279.1 billion). The operating result before special items in 2023 amounted to EUR 22.6 billion (2022: EUR 22.5 billion).

About CGI
Founded in 1976, CGI is among the largest independent IT and business consulting services firms in the world. With 91,000 consultants and professionals across the globe, CGI delivers an end-to-end portfolio of capabilities, from strategic IT and business consulting to systems integration, managed IT and business process services and intellectual property solutions. CGI works with clients through a local relationship model complemented by a global delivery network that helps clients digitally transform their organizations and accelerate results. CGI Fiscal 2024 reported revenue is CA$14.68 billion and CGI shares are listed on the TSX (GIB.A) and the NYSE (GIB). Learn more at cgi.com.

View original content:https://www.prnewswire.com/news-releases/volkswagen-group-and-cgi-deepen-global-collaboration-302377309.html

SOURCE CGI Inc.

FAQ

What is the timeline for Volkswagen's IT system modernization with CGI (GIB)?

Volkswagen plans to complete its IT system modernization by 2026, replacing hundreds of legacy systems with more powerful and scalable solutions through the collaboration with CGI.

How will the MARV1N partnership affect CGI's (GIB) business with Volkswagen?

MARV1N, as a wholly-owned subsidiary of CGI Germany, will provide dedicated software development services exclusively for Volkswagen Group projects, strengthening CGI's strategic partnership with the automotive giant.

What are the main objectives of the CGI (GIB) and Volkswagen collaboration?

The collaboration aims to accelerate software development, reduce IT-related operating costs, and modernize Volkswagen's IT infrastructure through the MARV1N development unit.

What specific projects will MARV1N focus on for CGI (GIB) and Volkswagen?

MARV1N will initially focus on Technical Development projects, particularly developing a cross-company IT system for electrical/electronic architecture and software functions data management.

How will the CGI (GIB) partnership improve Volkswagen's software development?

The partnership will enable faster development times for software updates and new digital products, including Functions on Demand, through centralized data management and dedicated development teams.