Dusseldorf, Berlin With a show of strength, the carmaker Volkswagen wants to keep its core brand from falling into the red. At a works meeting on Wednesday, CEO Thomas Schäfer spoke of a planned improvement in earnings of ten billion euros.
This goal should be achieved by 2026, said Schäfer, who is responsible for volume business (VW, Skoda, Seat). The core brand VW with the main plant in Wolfsburg is under pressure because the costs are getting out of hand.
According to Schäfer, expenditure on energy and materials would increase massively, which would eat up a large part of the earnings growth announced. The bottom line is that the board expects an increase in operating profit of around three billion euros.
Schäfer thus confirmed a report by the Handelsblatt. In his speech to the workforce, the brand board confirmed the goal of an operating margin of 6.5 percent for 2026. In the first quarter, this had dropped to three percent. Within the company, Schäfer has named the program “Accelerate Forward”.
In addition to savings, this provides for additional income through better capacity utilization of the plants and an expansion of business in the important markets of China and North America. The head of the works council, Daniela Cavallo, therefore spoke to the employees about an efficiency and strategy program. “We have to get to the root of a few things here,” she said.
The core brand is probably the top priority at Blume
Schäfer’s remarks were received by the workforce with “concentrated calm”, as one employee reported afterwards. Employees knew it had to happen. If Schäfer has his way, the program should help to invest “in product substance, quality, software and the qualification of the workforce”.
The brand boss described the plans to the workforce as “a great, joint effort to lead the VW brand to new strengths and to position it robustly for the future”.
Management intends to develop and approve milestones together with the employee representatives by October. Works council leader Cavallo emphasized that “the desired savings must be achieved without cutting back on the collective bargaining agreement or job security”.
The decisive levers are different, such as group management, cooperation between the brands and the focus on software and product quality. At VW there is an employment guarantee until 2029, which is also covered by offers for further qualification to employees in classic areas.
According to Handelsblatt information, the supervisory board met on Tuesday to deal with the realignment of the strategy. A manager from the top level spoke of the “biggest restructuring in decades”. The core brand should enjoy top priority in Blume’s plans.
VW is by far the largest brand in the group and is not profitable enough in the mass market compared to competitors such as Stellantis. Most recently, the operating return on sales of the core brand was just three percent. So, for Blume’s profitability plans to work, the brand is crucial.
The CEO has developed a general overhaul of the corporate strategy, which he intends to present to investors on June 21 at a capital market day. More announcements are expected for the day. Since Blume took office, VW shares have fallen by around five percent, but the paper has been able to increase again in the past two weeks.
The austerity program will be controlled by ex-China boss Wöllenstein
A so-called “Project Management Office” is responsible for developing and controlling the program at the core Volkswagen brand. The committee is headed by the long-standing head of China, Stephan Wöllenstein, who enjoys a high reputation in industry circles.
The program will be implemented on two levels. The first are larger areas of action within the brand, for each of which there will be specific goals – including administration, technical development, material costs, products, pricing, vehicle construction, sales and quality.
On a second level there are synergy projects with other brands. In the future, Volkswagen will also offer significantly fewer equipment variants and delete weak-running models such as the VW Arteon.
The head of the works council speaks of an efficiency and strategy program.
(Photo: Volkswagen)
The focus is on “a few, but on Volkswagen core models,” said Schäfer to the workforce. This reduces complexity and brings more results. As the Handelsblatt previously reported, the core brand could make do with ten models in the medium term.
Schäfer is also serious about reducing variants, as he explained at the meeting. In the future, the Tiguan and Passat will no longer have a manual switch variant, and the new Passat will also be offered with around 450 fewer seat variants. According to Schäfer, the new electric hope ID.7 has 99 percent fewer configuration options than a Golf 7.
CFO Arno Antlitz praised the program of the core brand on the LinkedIn career platform and emphasized the cooperation in the volume brand group, which includes VW, Skoda, Seat/Cupra and VW commercial vehicles. When it came to the quarterly results, Antlitz announced to investors that he was “of course not happy” with the returns from the core brand.
A central joint project of the volume brands is the small electric car ID.2, which is to be launched in 2025 at a base price of less than 25,000 euros and is to be manufactured at Seat in Spain together with other brand variants of the model.
More: VW boss Oliver Blume is planning “the biggest conversion in decades”.