Volkswagen Struggles with Cost-Cutting Targets

BERLIN (Reuters) – Volkswagen’s passenger cars brand is facing challenges in meeting its €10 billion ($11.14 billion) cost-cutting target, impacted by low sales and missing parts, according to Handelsblatt.

A Volkswagen spokesperson declined to comment.

The brand is currently 2-3 billion euros short of its savings goal for this year, as reported by two unnamed sources to Handelsblatt.

As Europe’s leading carmaker by sales, Volkswagen announced last December its planned cost cuts aimed at improving the brand’s return on sales to 6.5% by 2026 from 2.3% this year.

To achieve this, Volkswagen listed measures such as:
– Reducing administrative costs by 20%
– Saving €1 billion by 2028 by shortening product development cycles from 50 months to three years
– Cutting production times
– Scrapping a proposed €800 million R&D site in Wolfsburg

Volkswagen expects savings of up to €4 billion to take effect throughout 2024.

Chief Financial Officer Arno Antlitz noted that some measures would take time to be realized.

Chief Executive Oliver Blume emphasized that “costs, costs, costs” will be the focus for the coming years after reporting decreased margins in the first half of the year.

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