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Volkswagen Group—Europe’s largest automotive group—has encountered some serious challenges as its main brand needs to cut costs on a massive scale.
According to Reuters, Volkswagen Brand CEO Thomas Schaefer warned the staff during a meeting at the carmaker’s headquarters in Wolfsburg that costs are too high, while productivity is too low, which together makes the cars uncompetitive: “With many of our pre-existing structures, processes and high costs, we are no longer competitive as the Volkswagen brand.”
The German manufacturer is now working on a $10.9 billion (€10 billion) savings program, which will include staff reductions, the report says.
The amount of cost cuts is quite significant—equivalent to at least two large factories. It’s not clear yet how the company will achieve its goal but details will be defined by the end of 2024.
Gunnar Kilian, Volkswagen human resources board member said: “We need to finally be brave and honest enough to throw things overboard that are being duplicated within the company or are simply ballast we don’t need for good results.”
It seems that the situation is serious. As far as electric cars are concerned, Volkswagen was recently forced to slow down production at some of its plants in Europe. In some cases, the slowdowns were due to parts supply issues, and in others, because of insufficient demand.
Assuming that the company mages to reduce its costs and improve productivity, buyers should see lower prices.
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