In the coming five years, Volkswagen plans to keep investments stable at around 180 billion euros between 2024 and 2028, Germany’s Handelsblatt newspaper reported on Tuesday. More than two-thirds of this sum will be spent on electrification, autonomous driving, and new mobility services. The supervisory board had already approved the investment plan, the newspaper quoted a company source as saying. However, this was on condition that specific goals of the cost-cutting drive underway at Volkswagen’s passenger car brand were met.
Volkswagen plans to reduce the costs of its mass-market brands by shifting toward electric vehicles (EVs) and making savings in other areas, such as reducing model proliferation and shorter development times. The automaker has significantly cut its combustion engine production and is planning a network of fast-charging stations to boost EV adoption.
Investors eagerly await the results of a reorganization drive instigated by VW Chief Executive Oliver Blume after his appointment last year. A so-called “virtual equity story” exercise instigated by the German carmaker aims to make the group of brands, which range from Audi to Bentley, more attractive to investors. The project has revived the traditional conflict between brand freedom and efforts to leverage group technology and platforms.
The reorganization is also designed to increase profits, which is vital in Volkswagen’s bid to become the world’s biggest maker of electric cars. A successful turnaround in earnings could improve Volkswagen’s lowly stock market valuation and help it secure more funding.
VW is also accelerating its push into EVs, setting bold margin targets for its mass-market brands and investing heavily in a global infrastructure to support long-distance travel for EV owners. But, as Reuters Breaking Views columnist Neil Unmack points out, more than the company’s ambitious plans may be needed to offset its lowly valuation and underspending on research and development.
BERLIN (Reuters) – Volkswagen must catch up in defining critical measures of a cost-cutting drive for its namesake brand as talks with powerful workers’ representatives drag on. The volume brand said in June that management and employees had agreed on several points to streamline the firm in a drive to meet a return-on-sales target of 6.5 percent by 2026.
During the first meeting with workers representatives since that agreement, the company told staff it would aim to cut jobs through early or partial retirement and only lay off people if they were forced to leave by an unexpected change in the business environment. The company also says it will avoid hiring new people to replace those leaving. The company had planned to present the final details of its performance program for the core brand in October. But the works council has pushed back the date, and the program is expected to be defined by year’s end, according to the sources. This will likely delay a target to cut costs by 10 billion euros and slash its personnel headcount by 4,000 by 2022, compared with a plan for a minor reduction by 2029.
