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Volkswagen AG’s namesake brand plans to deliver a sustained boost in earnings of about €10 billion ($10.8 billion) in 2026 as part of a plan to lower costs and increase profits as the carmaker transitions to electric cars.
The company aims to more than double profitability at its VW brand to 6.5%, the latest in a long line of attempts to improve returns, the VW board and workers council said in a joint statement on Wednesday. The program aims to streamline its model range and make development and production more efficient.
Chief Executive Officer Oliver Blume is seeking to boost returns at the Golf and Tiguan maker, which has been hampered by bloated processes, high development spending and internal competition. Blume’s plans will be implemented in “close consultation” with employee representatives, and it should be in force by October, the statement said.
As part of the plans, VW will pool production across more brands with its main plant in Wolfsburg potentially lowering capacity, a person familiar with the matter said. The site at one point was on course for output of 1 million cars. With the switch to making electric vehicles requiring fewer workers, VW may cut or reduce some shifts across factories. So far, VW isn’t planning job cuts with a large number of retiring workers likely to suffice to reduce the workforce.
VW brand head Thomas Schäfer said in the statement that VW plans to focus more on volume models, discontinuing lower-volume vehicles such as the VW Arteon. The company is expected to provide more detail on the measures at a June 21 investor event.
While VW continues to deliver strong profits, pushing through deeper changes at the carmaking behemoth have become central for Blume in the wrenching switch to EVs and increasing competition in China, its biggest market. The company’s rolling five-year spending plan has ballooned to €180 billion due to spending on software, EVs and turning around a market share slide in China.
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