VW’s “new age” platform could slow down profits image

Analysts think VW has a new challenge ahead, because the platform the Germans spent six years in development may not be functioning according to plan.

Seen as a highly adaptable vehicle platform, the “MQB”, VW also heralded it last year as the dawn of a new era for car production. But, according to analysts, it’s weighing heavy on profits and its eventual savings could prove less than the ambitious initial targets.

A German acronym for “modular transverse matrix”, MQB enables VW to design, develop and build all the small and medium front-wheel-drive models of its four biggest car brands on a single platform, for a total of as many as 4 million units anually, including the Golf and Audi A3.

“It’s more likely that VW has a cost problem on MQB,” said London-based Bernstein analyst Abbas Quettawala.”MQB is overhyped,” he further commented.

“Maybe VW fell victim to the old disease of changing too many things with MQB and is building the cars in a too expensive way,” added Frankfurt-based Bankhaus Metzler analyst Juergen Pieper.

None the less, the costs of the engineering restructuring are now close to outrunning the benefits at a time when Europe’s largest automaker, mulling huge growth overseas, is also ready to introduce new cost cutting strategies to overcome weak demand in its home region.

Via Reuters