Volkswagen aims to further cut brand costs due to lower sales in Europe

Article by Anita Panait, on September 27, 2013

Volkswagen needs to further reduce costs at its namesake passenger car brand at all levels, departments, regions and plants to better offset the effects of slumping sales in Europe. Arno Antlitz, VW brand board member for accounting and controlling, told 18,000 employees at a meeting in Wolfsburg, Germany that the German company needs “solid earning power and a competitive cost position."

He said that the VW brand's diversified regional presence is a competitive advantage and will be expanded further. He noted that the carmaker was able to “invest record sums” in future projects in spite of the crisis.

The German carmaker managed to stay afloat and remain profitable despite the still weakening vehicle industry in Europe, mainly thanks to large presence in China and profits from upscale brands like Porsche and Audi. The VW brand passenger car division posted a 34-percent drop in operating profit in the first half of 2013 to EUR1.49 billion ($2 billion).

VW’s group sales declined 5 percent in the EU and EFTA markets in the first eight months of 2013, similar to the drop logged by the auto industry in the regions, according to industry association ACEA data. VW brand sales dropped 8 percent in the period. VW last week dismissed a report by Manager Magazin that it might fail to achieve its financial targets.

The magazine, publication citing company sources, reported that VW’s profits are undermined by higher-than-expected costs for a new modular production architecture MQB. VW disclosed earlier this month that it targets to raise profitability at its volume brands even if it remains unsure when the European vehicle market will recover.

Topics: vw, europe, sales

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