VW Wants to Cut Costs by Reducing Variety of Parts on Polo and Golf

A carmaker can never have too many cost-cutting measures, which is why Volkswagen has come up with new ideas to boost its profits.

The German automaker wants to scale back the range of components at its main auto brand as a way to reduce costs. A solution would be to reduce the variety of parts used in vehicles such as the Golf and Polo hatchbacks, with Chief Financial Officer Hans Dieter Poetsch saying that would offer “significant savings potential.”

More specifically, VW could lower the number of battery and interior-lamp models used in the current Golf by about half. Another way to reduce costs would be to cut engine and gearbox variants for the next-generation VW Polo by 30 percent, Poetsch added.

VW aims to restore margins at its passenger-car unit, which is the largest division by volume. That’s part of a push for the automaker to reach a 2018 group profitability target.

The German brand has a target of lifting earnings by €5 billion ($5.8 billion) by 2017, with operating profit almost tripling to at least 6 percent of revenue by 2018 from 2.3 percent in the first nine months of 2014.

Poetsch said VW is “well on track” to reach goals in three years after meeting 2014 group targets, which included revenue moving by 3 percent around the previous year’s level and an operating margin of 5.5 percent to 6.5 percent of sales.

Story references: Bloomberg


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