Volkswagen unveils plan to boost flagship brand

GERMAN auto giant Volkswagen unveiled a plan Wednesday (Jun 14) to more than double its flagship VW brand’s return on sales and increase earnings by around 10 billion euros (S$14.5 billion) by 2026.

It will involve changes across many areas of the brand, with the aim of achieving a return of 6.5 per cent, as well as “synergies” to reduce costs.

Returns came in at about three per cent from January to March this year.

By comparison, luxury brands Porsche and Audi have margins exceeding 10 per cent while France’s Renault is targeting eight per cent by 2025 after 5.6 last year.

The Volkswagen group has 10 brands, including Audi, Porsche and Skoda.

Last year, the VW brand represented just over half the group’s sales but its margins are the weakest.

Achieving the higher return “is very ambitious, but feasible if we pool our efforts,” said Thomas Schaefer, CEO of the VW brand, in a statement.

“This will enable us to safeguard jobs, finance our future from our own resources and continue to invest in new vehicles and technologies, in the modernisation of our plants and in staff training.”

As part of its plans, VW will focus more on its top-selling models, while less popular ones may be discontinued. The number of variants of particular models may also be reduced.

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All the new measures should be up and running by October this year.

The Volkswagen group suffered a torrid few years after admitting in 2015 it had installed software to rig emission levels in 11 million diesel vehicles worldwide to make them appear less polluting.

It has since invested huge sums in a shift to electric vehicles, seeking to take on rivals such as US automaker Tesla. AFP