VW Group’s flagship brand VW targets €10bn in cost savings by 2026

Volkswagen’s flagship Brand aims to reduce costs by €10bn by 2026 in order to increase earnings on a market that is becoming increasingly competitive.

Arno Antlitz posted on LinkedIn, on Wednesday, that the brand will “streamline” their product range and reduce manufacturing capacity to achieve a target margin of 6.5%. The first quarter of this year saw a margin of 3%.

Antlitz stated that the group is now “concentrating more on profitability and cashflow” to ensure long-term investment.

VW anticipates that the cost-cutting programme will begin in October of this year. The company plans to reduce costs by producing cars from some of its volume-brands, including Cupra, Skoda, and Seat, at the same factories. VW’s Arteon is one of the brands that will be discontinued.

VW faces challenges in several areas, including a declining market share in China and growing competition in Europe from Chinese competitors as well as rising costs associated with the switch to electric vehicles.

Next week, the group will hold a Capital Markets Day where new Chief Executive Oliver Blume is expected announce wide-ranging reductions at its headquarters in Wolfsburg.

Thomas Schafer said in a separate press release that the VW brand’s cost-saving programme was the “number one priority” for the board.

Un spokesperson stated that it was not yet decided how the savings and earnings will be affected.

The German automaker committed €180bn to investments in the next five-year period as it plans to manufacture batteries in-house and fight for market share in China and the US.

VW’s powerful, employee-representing works council approved the new cost-cutting plan. The large number of employees at the company is closely protected by Germany’s powerful trade unions.

In a statement released jointly with the company, Daniela Cavallo, chair of VW’s works council said: “We are all in agreement that we must achieve the savings targeted without reducing the collectively agreed wages and jobs.”