Volkswagen confirms further cost cutting measures being put in place

The Volkswagen brand is looking to “significantly improve its earnings performance” in the coming years, “in order to finance investments in future technologies from its own resources”, it said.

The company added that in order to finance “the enormous future investments”, it will have to realise even higher cost savings than previously planned. The pact for the future will realise cost savings amounting to more than €2.2 billion by the end of 2018. That means the lion’s share of the planned total savings of €3 billion by 2020 will already have been achieved. Further massive savings are expected from measures such as the strong expansion of the platform model.

“We must force the pace of our transformation and become more efficient and agile. We cannot let up in our efforts and must realise further substantial improvements. What we have achieved so far is still not enough,” said Ralf Brandstätter, the brand’s chief operating officer, responsible for day-to-day business.

“We have therefore defined a bundle of measures to improve profitability that will safeguard the full implementation of the pact for the future while also supplementing the topics of the pact and setting the right course for 2025,” CFO Arno Antlitz explained. “We are confident that we will be able to reach our target of an operating return of at least 6% in 2022, three years earlier than originally planned.”

In the meantime, in total, the Volkswagen brand will be investing over €11 billion in emobility, digitalisation, autonomous driving and mobility services from2019 to 2023, of which over €9 billion will be spent on Volkswagen’s electrification offensive. The brand currently has two fully-electric cars in its program. This number will increase to around 20 by 2025, with planned production set at over one million units.

With the fully-electric ID.* made in Zwickau, where the order process features pre-booking for the first time, Volkswagen is putting a new generation of vehicles on the road that also sets standards in digitalisation and connectivity.

“With the ID., the dawning of the e-mobility era and connectivity for our brand becomes tangible for our customers, too. The ID. will be the first fully-connected, fully-electric car and will be a symbol of the ‘New Volkswagen’,” board member for sales Jürgen Stackmann, said.

Volkswagen will also be investing strongly in digitalsation. In August this year, it set aside US$4 billion to invest on digitalisation by 2025 as “intends to generate sales revenue running into billions from digital offerings and services”. With its “Transform 2025+” strategy, the brand launched the biggest change process in its history. By 2025, Volkswagen intends to play a leading role in the new automobile industry, set up innovative mobility solutions and become the world market leader in e-mobility.

The focus is on the evolution from an automaker to a mobility service provider with a connected fleet. Meanwhile, 2020 will therefore be a turning point for the Volkswagen brand. While today, some 1.5 million vehicles with no online access can already connect with the internet with the “Volkswagen Connect” retrofit solution. 2020 will be the year when Volkswagen begins connecting its entire fleet. Each year, over five million new vehicles will then become part of the Internet of Things.


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