VW Cutting Number of Powertrain Offerings in $3.4B Cost Cutting Move
Volkswagen announced plans to trim another $3.4 billion from its operating costs by 2020 during a press conference in Wolfsburg today.
The automaker will be “discontinuing 25% of engine and gearbox variants across Europe,” VW chief operating officer Ralf Brandstätter told Autocar, a move that will help it to simplify and streamline its business in the region. It also plans on reducing the complexity of various trim levels and equipment packages for its cars. VW said that it will be looking at removing trim levels or model variants with “low customer demand.”
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Cutting back on administrative expenses will also be part of the cost control measures.The automaker has reduced its workforce by around 5,600 employees and a further 9,600 have signed early retirement agreements.
“By 2020 we will achieve three billion euros in cost savings, and now aim for a further three billion euros by 2023,” VW board member Arno Antlitz said during the conference.
In addition to the cost control measures, VW is also hoping to increase its plant productivity by 30% by 2025.
The end goal for VW is to boost profit margins to 6 percent by 2022, which is three years earlier than it had previously hoped to achieve the goal.
At the same time, VW will sink more than 11 billion euros into various mobility-related business operations by 2023, with the bulk of that going toward electric and autonomous vehicles.
“We must force the pace of our transformation and become more efficient and agile,”Brandstätter said. “We cannot let up in our efforts and must realize further substantial improvements. What we have achieved so far is still not enough.”
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Sam McEachern holds a diploma in journalism from St. Clair College in Windsor, Ontario, and has been covering the automotive industry for over 5 years. He conducts reviews and writes AutoGuide's news content. He's a die-hard motorsports fan with a passion for performance cars of all sorts.
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