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Volkswagen focusing on cost cuts due to rising threats

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Volkswagen focusing on cost cuts due to rising threats

Volkswagen AG, last year’s second largest global automaker and the biggest in Europe, has started to implement a strategy designed to safeguard profits as the home region’s recovery is still weak, China threatens with a revival of sanctions and the US remains a tough nut to crack.

The German automaker aims to become the world’s largest automaker, besting in the process the current leader, Japan’s Toyota. In the meantime though, news has come up of the company’s problems with their MQB modular platform and the dwindling earnings at the core VW brand. CEO Martin Winterkorn even announced last month a plan designed to cut costs at the passenger car brand by 5 billion euros ($6.7 billion) annually since 2017. But even this plan has had its problems, with the labor leaders already ousting the consultants that worked on the strategy’s development.

Besides that, Volkswagen counts China as its biggest market – where it managed to outsell the perennial No.1 – General Motors. But the sales increases are now threatened by China’s move to enforce anti-monopoly laws, targeting the wide auto industry with numerous probes. Its premium subsidiary Audi has already been found accountable for violating antitrust rules.

Meanwhile, Europe’s recovery is showing conflicting signs – it’s rising steadily overall, but the biggest market there – Germany – had some hiccups along the way with monthly declines now and then. And let’s not forget the US market, where Audi is seeing great sales increases but it’s still very far away from its eternal rivals BMW and Mercedes Benz. Also,Volkswagen is losing market share while all other brands grow along the overall industry.

by Aurel Niculescu (my Google+) - Tuesday, August 19th, 2014 - filed under Industry, News, Volkswagen. Image credit: .
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