VW To Massively Cut Model Portfolio Complexity In Bid To Raise Profits

The Volkswagen brand is looking to raise its profits margins faster than it had previously planned, hoping to achieve a 6% rise in 2022, three years earlier than initially anticipated. Recently, their margins stood at 4%.

VW will start things off by investing more than 11 billion euros ($12.5 billion) in e-mobility, digitalization, autonomous driving technologies and mobility services by the year 2023, with most of that money going towards electric vehicle development, reports Automotive News Europe.

While it’s unclear at this point how their plans will affect jobs, the automaker has ruled out the idea of any forced layoffs.

As for their lineup of products, there will be a “massive reduction” in its complexity. In Europe, VW will discontinue 25% of engine-transmission variants with low customer demand in the coming model year. Meanwhile, talks with Ford about a potential alliance beyond commercial vehicles are ongoing.

The two automotive giants could work together in areas such as electric and autonomous vehicle technology, and as far as the U.S. is concerned, VW plans on adding at least two new SUV models, to go with their medium term electric car plans – although for the latter, a decision has yet to be made regarding a production site.

Speaking of which, a potential global alliance with Ford could result in the German automaker building its vehicles at Ford’s underutilized plants in the U.S.

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  • ksegg

    This sounds ridiculous on my part, but I will never understand the sheer greed of companies looking to ever increase their profits, when their profit margins are already doing well.

    “Company X made $50 BILLION this year in profits. We’re ahead by 125% over goal. THIS IS NOT ACCEPTABLE. WE NEED TO MAKE $100 BILLION BY NEXT QUARTER! CUT THE STAFF IN HALF.”

    Ridiculous.

    • Howfarr

      Are you a millennial?
      You’ve made a vast sweeping statement, but also in the same vast sweeping statement made it clear that you know nothing about the thing you’re making a vast sweeping statement about?

      • NoMan2015

        * eyeroll * maybe critique the person, not the entire generation (which you’re randomly assuming the author is a part of).

        • Howfarr

          Whats funnier is I am technically a millennial.

          • ksegg

            I thought you were an asshole. Eh, same thing.

          • NoMan2015

            I don’t think you know what “funnier” means…

          • Howfarr

            lol

      • ksegg

        Are you an asshole?

        Perhaps you should look up what sarcasm is.

        • Howfarr

          Where exactly is the sarcasm in your first comment?
          Maybe you should look up what it means…
          Oh that’s right you don’t look things up, you just make sweeping statements

    • NoMan2015

      Did you even read the article? “While it’s unclear at this point how their plans will affect jobs, the automaker has ruled out the idea of any forced layoffs.”

    • Finkployd

      I think it makes perfect sense; no one really knows what s in store for the ICE vehicles, witch is prob 99% of what they sell for now.

    • EXACTLY.

  • NoMan2015

    Talk about low hanging fruit: perhaps, VW, you shouldn’t have like 8 models that all do the same thing (T-Roc, T-Cross, Tharu, short/regular wheelbase Tiguan, etc) or multiple brands that overlap extensively (VW, Skoda, SEAT).

    • driv3r

      The multi-brand strategy is one of the core reasons for Volkswagens success in the past years as these brands address different customer segments, believe it or not. In regards to the mentioned SUVs: Other brands would be happy to have such a strong SUV lineup since SUVs are THE thing right now for the customers.
      GM or Ford would be more than happy to have such a strong offering somehow…

      • NoMan2015

        well, clearly not given the substance of this article re: cutting their portfolio. And I don’t believe it, given how similar new Skodas, SEATs, and VWs have become, particularly when we’re basically looking at German GM badge engineering at this point.

        It’s disingenuous to call all of their crossovers a true “lineup,” because most are not sold alongside each other and instead are sold in different markets. If they were instead to merge them into one or two vehicles that are sold world-wide, they would easily increase their profit margins.

        • OdysseyTag

          It from the looks of it sounds like a proactive approach more than an reactive one. The article states that it has more to do with reaching a profit target than damage control. I’d agree with driv3r in that more than any automative group today, VW has seemingly done the impossible by not only maintaining a portfolio of over a dozen brands in this day and age, but also becoming synonymous with their platform sharing culture.

          So far that’s proven well for them. And I think part of the reason is that they maximize the utilisation of every model they develop to offset costs across the board. For me, this would make the overlapping issue a problem only felt in markets like China and the UK where all VW owned brands aswell as entire model line ups are present.

          I do see tidying it’s model complement as a good move. It’s increasingly becoming apparent that most are revising their operations in order to pump up profability, avoid insolvency or prepare for a big shift in the industry.

        • driv3r

          Simply no. That is exactly what the difference in the approach of simple and cheap American badge engineering and the German VW brand engineering is.
          GM, Ford and many others take one of their models and slap a different badge on it, done. Maybe they’ll revise the front and back bumpers but thats it.
          Within VW the three brands VW, Skoda and Seat share the underpinnings (MQB), the engines and transmissions and some of the tech like infotainment. Still: All models have their complete development and engineering done separately and mostly independently at their respective brand. And this does show when it comes to driving characteristics, interior and exterior design as well as engine options etc.

          Surely its a SUV line up. In Europe you get the T-Cross, T-Roc, Tiguan, Tiguan Allspace and Touareg. Others markets such as the US or China get instead or additionally other models such as the Tharu or Atlas/Terramont. You can’t merge a Mini-SUV with a full-size SUV. Its starts with size and price point and ends with serving different market segments and customer needs.

          • NoMan2015

            Clearly you haven’t looked closely at the similarities between the Tiguan, Ateca/Tarraco, and the Karoq/Kodiaq. That’s no different than what modern day GM does between the Acadia, Enclave, Traverse, or what Ford and Lincoln do between their shared products.

            And I wasn’t saying merge “mini-suv with a full-size SUV.” I was referring to vehicles in the same class, like the T-Cross, T-Roc, Tharu, short wheelbase Tiguan, and whatever the US is going to get that slots below the long-wheelbase Tiguan (which is none of the above).

          • driv3r

            Be sure that I know and understand the industry very well.
            T-Cross, T-Roc, Tharu and Tiguan don’t play in the same class. The T-Cross is a Polo-SUV, the T-Roc a Golf-SUV and the Tiguan a Passat SUV. The Tharu is being build as a Tiguan size but simpler China version to be able to be offered at a lower price point to the customers.
            Tarraco and Kodiaq as 7 seater models can be seen as a replacement for minivan models such as the Seat Alhambra.
            May seem like many different models but looking at their sales figures they make a hell lot of sense.

          • Miknik

            actually, the “cheap US rebadging” is exactly what VAG is doing right now; Whilst in the previous generations (I’d say Golf Km. 4-6), most brands had kind of distinctive design languages and models sharing underpinnings but not design, now they share bodies (even up to Bentyaga/Q7 and Touareg, just different sheet metal but basic body structure is identical, as visible at the green house and door cutlines), and even the general crease happy design language;

            A Seat Taracco is just a VW Tiguan Allspace with a different grille and headlights, a Skoda Karoq is the same to a Seat Ateca, and the future China/US small VW cross over as well; Classic rebadging done to the limits, or, sometimes beyond. A Tiguan, Tarraco and even the similar looking but not (yet) rebadged SKoda Kodiaq cater exactly teh sam ecustomers, as do the smaller CIUvs respectively; EVen pricing is similar;

            At the same time, GM went nearly bankrupt with this strategy earlier, and nowadays, it#s done far less (Ford only has 2 brands left nowadays, with no re-badges, btw.), so it seems whilst the US is moving on, VW seems to be keen to follow their mistakes from the 80ies to 2000s;

          • driv3r

            No, they don’t share any body parts. Each part is manufactured individually for each model as the cant share the metal presses and welding. (And this is the main reason why almost every facelift model of any manufacturer doesn’t get changes to the metal parts of the body as changing the metal presses would come at a significant unjustifiable cost.) Additionally the four SUV models mentioned even sit on different wheelbases.
            Again its no rebadging. I explained the why above. They don’t cater the same customers. Seat customers are among the youngest across the VW Group. They wouldn’t even consider a VW or a Skoda but more a Honda or Mazda for example. Skoda customers look for maximum and practicality and for a car (and brand) that is not bold, not loud and doesn’t cause any stir when parked in the driveway.
            I can’t see VWs mistakes from the 80ies where they didnt even own any of the many brands except for Audi (and Seat partially).

  • Belthronding

    no need to cut any model or variant,JUST CHEAT ‘EM ALL !!!

    • Daniela Wolf

      Get over it….

      • Belthronding

        yes i should have but simply i can’t. it still amazes me.

    • Take it easy, man. It’s just cars.

  • performante

    Just leave GTI and R out of it, please.

  • Bash

    Cutting out trims is not the solution VW. Your cars are simply expensive!

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