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VW brand revamps model development in drive to lift margins

[BERLIN] Volkswagen has streamlined vehicle development at its core VW brand as the troubled carmaker strives to boost profitability and adapt more quickly to market trends.

VW's largest division by sales and revenue has traditionally been slow to upgrade models and uncover new segments in markets such as the United States and Brazil, causing it to fall well short of a profit margin target of at least 6 per cent.

The brand's new chief executive Herbert Diess plans to cut investments at the division by 1 billion euros (US$1.1 billion) per year compared with previous targets and speed up efforts to increase cost savings.

On Wednesday, VW said Diess had appointed a senior manager for each of the four main production series covering VW's small, compact, mid-size and battery-powered cars, giving them full responsibility for matters such as technology and redesigns.

"We expect these changes to bring about a major acceleration in (vehicle) development," Diess said. The new structure "strengthens cooperation across all functions and also increases the profitability of the brand." Product management chief Klaus-Gerhard Wolpert will take charge of small cars such as the Polo; Karlheinz Hell, a director in purchasing, will run the compact category including the top-selling Golf; Elmar-Marius Licharz will oversee mid-size and full-size cars, while Christian Senger, newly hired from auto supplier Continental will head the battery-powered vehicle group, VW said.

Europe's largest automaker, faced with multi-billion euros of costs from its emissions-cheating scandal involving up to about 11 million vehicle globally, is working on a new structure to give more power to its regional operations and brands.