VW to make $3.4bn cost cuts

Business Day - - Front Page - Jan Schwartz and Ed­ward Tay­lor Wolfs­burg, Ger­many

Volk­swa­gen an­nounced an­other €3bn of cost cuts on Thurs­day in an ef­fort to speed up an im­prove­ment in profit mar­gins at its core VW brand.

Volk­swa­gen an­nounced an­other €3bn of cost cuts on Thurs­day in an ef­fort to speed up an im­prove­ment in profit mar­gins at its core VW brand.

Still bat­tling to re­cover from a 2015 scan­dal over emis­sions test cheat­ing, the Ger­man car­maker has been cut­ting costs to fund an am­bi­tious shift to elec­tric cars and au­to­mated driv­ing.

A key goal is to im­prove mar­gins at its mass-mar­ket VW brand, its largest divi­sion by sales, but which has long lagged the prof­itabil­ity of ri­vals such as Toy­ota, due in part to high labour costs at its Ger­man plants.

“By 2020 we will achieve €3bn in cost sav­ings, and aim for a fur­ther €3bn by 2023,” Arno Antlitz, the board mem­ber re­spon­si­ble for fi­nance at the VW brand, told a news con­fer­ence in Wolfs­burg, Ger­many.

That should help it reach a profit mar­gin of at least 6% by 2022, the com­pany added.

VW said it aimed to re­duce ad­min­is­tra­tive ex­penses and re­move com­plex­ity from the brand’s model line-up, while also striv­ing to raise the pro­duc­tiv­ity of its plants by about 30% by 2025. The com­pany did not give any de­tails about job cuts but ruled out forced re­dun­dan­cies.

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