Volkswagen says its core VW brand is ‘no longer competitive’

Berlin — Volkswagen’s original brand is “no longer competitive,” the company’s brand chief warned on Monday, due to rising costs and falling productivity.

“With the many structures and processes we have in place and the high costs, we are no longer able to compete as a Volkswagen brand,” Thomas Schaefer told employees during a meeting at the German plant. The automaker’s headquarters are in Wolfsburg, Germany, according to a post on the company’s intranet site seen by Reuters.

A company spokesman said that the company is working to improve the financial performance of its famous car brand that bears the international name. This process is gaining special importance as the Volkswagen Group, the parent company, shifts to producing more electric cars.

Volkswagen Group It owns several brands including Porsche, Audi, and its original brand, Volkswagen, which was founded in 1937.

Among the Volkswagen Group’s mass-market brands, including Skoda, based in the Czech Republic, and SEAT, based in Spain, the Volkswagen brand had the highest sales volumes, to date, but with the lowest operating profit margins during the first three months of this year. . According to the company’s presentation.

The Volkswagen Group hopes to increase the return on sales of the Volkswagen brand from 3.6% last year to 6.5% by 2026, according to an investor presentation.

In public presentations, Volkswagen said it was trying to improve the performance of all its major brands through, among other things, better differentiation among them as well as cutting wasteful spending.

“We ultimately need to be brave and honest enough to throw away things that are duplicated within the company or just ballast that we don’t need to achieve good results,” Kilian said.

The company, one of the world’s largest automakers, is in the midst of negotiations with its works board over a cost-cutting plan at the Volkswagen brand, the first step in a group-wide drive to boost efficiency in shifting to… Electric cars.

The 10 billion euro ($10.9 billion) savings program will include staff reductions, managers told employees on Monday.

The company had previously said that it plans to take advantage of the “demographic curve” to reduce its workforce.

At Monday’s meeting, Human Resources Board Member Gunnar Kilian said this would be achieved through agreements on partial or early retirement.

Kilian added that the bulk of the €10 billion savings target will be achieved through measures other than staff reductions, with full details to be determined by the end of the year.