The Volkswagen brand is under pressure. This is more than a mere observation, because this is how brand boss Thomas Schäfer expresses himself in an internal letter. The brand is to be revised and put on a diet.
VW feels the pressure: brand boss prescribed austerity measures
“The pressure increases. The Volkswagen brand must act.” The drastic words come from someone who should know: VW brand boss Thomas Schäfer wrote to the employees of the flagship of the Volkswagen Group in an internal letter: “We see that our brand – despite all its strengths – is not yet economically sound is set up enough,” it also says (source: Reuters via Automotive News Europe).
But how is it supposed to succeed? The answer at Schäfer: The brand VW needs to make more money. Of the profit margin by 3 percent in the first quarter of 2023, he wants Volkswagen again up to 6.5 percent. Concrete measures are yet to be presented. It’s about increasing efficiency and getting more out of it – both overall and per car sold.
VW has recently calculated to fight in China the most important market for the car manufacturer. Especially when it comes to electric cars, which will be particularly important for the future, the largest German manufacturer has not yet been able to set foot on solid ground.
On the one hand, this is due to Tesla. The US manufacturer massively reduced prices first in China and then in other markets, including Germany. In China, other manufacturers have reacted and also made their e-cars cheaper – with losses in profits. VW, on the other hand, has ruled out this step so far.
Even if the specific steps are still unclear, there should be no redundancies at VW as part of the efficiency and savings program. Instead, one apparently continues to rely on synergy effects that are likely to result from closer cooperation among the volume brands. 3 billion euros per year are to be saved.
China not only has cheap e-cars in its luggage, but also real flagships:
Posterboy ID.2: Compact electric car should lead the way
The best and current example of this cooperation between VW, Skoda and Seat/Cupra is the compact electric car planned for 2025 under 25,000 euros. Pushing the price that far is a challenge for car manufacturers because of the expensive batteries for electric cars.
The more brands the ID.2 as the basis for their models use, the more the work should be worthwhile. At Cupra, the ID.2 becomes the sportier Raval. Skoda is also planning an offshoot, but is still holding back on details.