BERLIN — Volkswagen Group‘s namesake passenger car brand plans to increase earnings by around 10 billion euros ($10.82 billion) by 2026 by improving efficiency and lowering costs.
The brand aims to more than double profitability to 6.5 percent as part of the program. VW brand’s returns in the first quarter weakened to 3 percent from 3.6 percent in 2022.
VW Group CEO Oliver Blume is seeking to boost returns at the brand. His plan will be implemented in “close consultation” with employee representatives, and it should be in force by October, the VW board and workers council said in a joint statement on Wednesday.
VW is setting up a Project Management Office to develop and manage the program called “Acclerate Forward I Road to 6.5.” Its former China boss, Stephan Wöllenstein, will take over its management.
The program aims to streamline VW brand’s model range, and make development and production more efficient.
VW brand head Thomas Schaefer said the brand will focus on a small number of core volume models, discontinuing lower-volume vehicles such as the VW Arteon. “This will reduce complexity and deliver higher profits,” Schaefer said in the statement.
Reducing the number of variants will mean fewer configuration options, Schaefer said.
As an example he said VW’s new ID7 all-electric sedan has 99 percent fewer configuration options compared to a seventh-generation Golf.
Vehicle production for the VW brand, the commercial vehicles business, Seat, Cupra and Skoda will be more closely aligned for efficiency, Chief Financial Officer Arno Antlitz posted on LinkedIn on Wednesday.
Optimizing efficiency in production will be key to producing VW’s planned 25,000-euro entry-level electric vehicle set to be made in Spain, Antlitz said.
As part of the plans, VW will pool production across more brands with its main plant in Wolfsburg, potentially lowering capacity, a person familiar with the matter said. The site at one point was on course for output of 1 million cars.
With the switch to making electric vehicles requiring fewer workers, VW may cut or reduce some shifts across factories. So far, VW is not planning job cuts with a large number of retiring workers likely to suffice to reduce the workforce.
Pushing through deeper changes at the group have become central in the switch to EVs and increasing competition in China, its biggest market.
The company’s rolling five-year spending plan has ballooned to 180 billion euros due to spending on software, EVs and turning around a market share slide in China.
VW Group is due to present new financial targets and an updated corporate strategy at a capital markets day on June 21.
Reuters and Bloomberg contributed to this report