Business
VW brand ‘no longer competitive’ due to high costs: company chief
By Jake Beardslee · November 27, 2023
In brief…
- Parent VW Group working to boost financial performance of VW brand as part of shift to EVs
- €10B group-wide cost cutting scheme will include some job cuts to support EV transition
- Additional details on savings plan to be revealed by end of year
Volkswagen’s namesake brand is struggling to stay competitive in the face of high expenses and low efficiency, VW brand chief Thomas Schaefer acknowledged on Monday. Speaking to staff at VW headquarters, Schaefer admitted that “with many of our pre-existing structures, processes and high costs, we are no longer competitive as the Volkswagen brand,” according to an internal company memo viewed by Reuters.
VW is working on a turnaround plan to bolster financial performance of its core Volkswagen car brand, a necessary step as the broader VW Group shifts focus towards electric vehicles, a company spokesperson confirmed. Among VW Group’s mass-market brands, the VW marque has the highest sales but lowest profit margins. VW Group aims to lift VW brand’s return on sales substantially by 2026.
Negotiations are underway on a major cost-cutting scheme for the VW brand, representing the first phase of a €10 billion group-wide efficiency program to enable VW’s electric transition. While the savings drive entails some job reductions, most savings will stem from other measures to be detailed by year-end, Kilian noted.