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Volkswagen will renew its main brand and reduce costs to improve its profitability

Volkswagen is not going through its best moment. After the irregular deployment of its electric range ID. and the problems experienced by Cariad in the development of its new software architectures, the second largest manufacturer in the world wants to recover the shine of yesteryear and reverse its downward trend in markets such as China.

To do this, it will turn its main brand around with the aim of improving its profitability. “We can see that our brand, despite all its strengths, still does not have a strong enough economic foundation. We need to generate competitive returns in times of crisis and in a volatile world.”has pointed out thomas schaferCEO of the German firm, in an internal memo.

The executive aims to achieve a profit margin of 6.5%, a notable jump compared to the 3% registered in the first quarter of 2023. “The pressure is increasing. The Volkswagen brand must live up to it.”. According to Schäfer, the risk of a recession, problems in the supply chain, geopolitical conflicts and volatile prices for raw materials and energy have contributed to this instability.

Volkswagen will carry out a major cost savings program to increase its annual results by at least 3,000 million euros. The a priori adjustments will not focus on reducing the workforce, something that has been confirmed by Daniela Cavalloworker representative on the board of directors.

VW ID. 2all concept

Volkswagen wants to make profitable electric cars for less than 25,000 euros

“Profitability and job security are equally important and common goals. But there are no plans in this direction«. Schäfer also proposes to increase synergies between the different brands of the group, betting more strongly on joint development and production. Everything indicates that the future ultra-flexible SSP platform will play a fundamental role in these plans.

The financial director of the Volkswagen Group, arno antlitzbelieves that the manufacturer will be able to offer electric cars for 25,000 euros profitably in the short term. “At the moment, we are pretty sure we can hit that price. Many innovations are coming in the technical section.

We are going further; we will have much more scale [cuando lancemos el ID.2]. [También hemos visto una leve] improvement or relief in the cost of raw materials. Look at the lithium: it fell apart. Nickel also fell. So from this perspective, we are pretty sure we can achieve that goal of 25,000 euros and at the same time have a decent margin.”

Source | Automotive News Europe

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