The Volkswagen group wants to double the profitability of its flagship brand by radically reorganizing production to reduce costs, according to an internal note consulted this Thursday by AFP. Volkswagen is the historical brand of the German manufacturer of the same name that owns a dozen more such as Audi, Porsche or Seat. Last year it represented slightly less than half of the group’s sales.
In the first quarter, the operating performance of VW brand car sales fell to less than 3%. This is too little for Volkswagen, which relies on its namesake brand to generate margins and finance the switch to electric. Having reached the top of the brand last July, Thomas Schäfer is aiming for a much higher margin of 6.5%, he specified in the note. “That is why we are now launching a program to significantly increase efficiency and synergies. This is the only way to secure our future.”
“We are changing our approach”
The note does not detail the planned transformations. It evokes savings in production costs by developing the mix of brands in the group’s production lines. “We are changing our approach: we do not align our factories with brands, but with platforms. This then determines which models are produced there. Not vice versa, ”he said, citing the example of the joint production of Skoda. Superb and the VW Passat, a saving of 600 million euros according to him. This measure should save “billions in the coming years,” he said.
According to the German economic daily Handelsblatt, these savings would aim to increase the group’s annual result by at least three billion euros. The flagship brand therefore has a particular responsibility, especially since the group has privileged its production to the detriment of other brands in the volume segment, its entry segment (Skoda, Seat), at a time when the shortage of components prevented the group from responding to all requests.
Like its competitors, the Volkswagen group is preparing for the turn to electric, which it must finance with its sales margins, all engines combined, because electric cars in the entry-level market continue to be much less profitable than the thermal ones The manufacturer faces increased competition, especially in China, where it has recently lost market share.
The group would not foresee any layoffs, indicates the Handelsblatt. But in the long run, the number of jobs should decline, particularly since electric cars are cheaper to assemble. The group wants to present its plans to investors at a conference on June 21, the outlet reveals.
Source: BFM TV
