Volkswagen’s supervisory board will discuss new goals for the car company on Tuesday. It should primarily be about one topic: the large savings program of more than three billion euros alone in the so-called “volume group”, which includes the brands VW, Skoda and Seat. This is confirmed by several people from the group SZ. first had the Handelsblatt reported about it. Group-wide, the result should therefore be improved by more than five billion euros through cost reductions.
“The situation is serious,” wrote VW brand boss Thomas Schäfer recently in an executive newsletter. VW CFO Patrik Mayer is also quoted in it: “We simply cannot finance our future with a return of three percent like in the first quarter.” The target return for the VW brand is 6.5 percent by 2026, and eight percent for the entire volume group.
Concerns about the margin are great because it is well below expectations, even at a time when VW is still mainly making money with combustion engines. Many are now asking themselves in Wolfsburg: How is that supposed to be when the group is selling more and more electric cars? After all, these currently make even less profit than diesel and petrol engines.
And then there is the growing competitive pressure in the most important single market, China. There, the local automaker BYD recently managed to overtake VW in terms of sales. If the Wolfsburg-based company’s China offensive with new models and better software doesn’t work, VW could lose market share and profits in China in the long term – and this would put further pressure on the profit margin.
Investors are invited to the race track
The fact that the savings plans, which VW calls a “performance program” in a slightly more positive way, is now being discussed in the supervisory board has to do with an important appointment in the coming week. Then the car company wants to show investors from all over the world how sustainable the company and, above all, its individual brands are at a capital market day at the Hockenheimring. Managers at the top of the group have long viewed it as a problem that the sports car manufacturer Porsche is worth more on the stock exchange than VW.
In order to convince investors, group boss Oliver Blume and chief financial officer Arno Antlitz instructed the individual brands months ago to simulate IPOs. These are not supposed to be implemented – unlike at Porsche – but the brand managers should use them to measure themselves against the competition, for example Audi with BMW and Mercedes, or the brands from the volume group with Stellantis or Ford respective return targets: It should be twelve to 14 percent at Audi, for example, Porsche had long announced that it wanted to achieve even 20 percent.
The 6.5 percent return that is the target for the Volkswagen brand depends largely on the success of the austerity program. In this context, the Supervisory Board will also discuss a topic on Tuesday that is traditionally particularly controversial in Wolfsburg: the future of the parent plant. Which and, above all, how many cars will be built in Wolfsburg in the future could still turn out to be “tricky” according to estimates from corporate circles. The carmaker is now a long way from producing one million cars at its headquarters, which was once dreamed of at VW. Most recently, only about half of them are said to have rolled off the assembly line in Wolfsburg.
Now the head of the group, Blume, is apparently planning to reduce capacity at the main plant. The number of only around 600,000 vehicles is mentioned from group circles. VW does not officially confirm these numbers. Jobs are not to be cut for this purpose, but eliminated because many employees will retire in the next few years. Nevertheless, employee representatives should take a particularly close look at these plans.