Volkswagen Cutting Costs to Increase European Profits on Low Sales

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is trying to find ways to cut costs as the European auto market continues to fall, and a report in the German business publication Manager Magazin claims that VW Group may miss its 2015 profit goals due to slow growth and higher than expected costs of the MQB platform.

The report claimed that Volkswagen Group would have to reduce vehicle costs by about €1,000 per car to meet its 2015 profit targets. The magazine cited unnamed VW sources that said that the MQB platform was costing more than expected to implement and some future models may have lower profit margins than first expected.

VW released a statement responding to the article saying: “The suggested impression that Volkswagen does not stick to its targets any more is wrong. Volkswagen Aktiengesellschaft remains fully committed to its statements on the future business development of the Group.”

The company’s lead accountant Dr. Arno Antlitz also gave a speech to its 18,000 employees in Wolfsburg reassuring them that although the market is tough, the company is continuing to expand.

"We are able to invest record sums in our future projects in spite of the crisis. That is what strengthens our competitiveness and lays the foundations for taking Volkswagen to the top," said Dr. Antlitz.

In August, the European car market was down 5% from the previous August to 686,957 cars, while Volkswagen Group sales in the region were down 11% in August, and Volkswagen Passenger Car sales were down 6.7% in Europe in August.

The MQB platform is VW’s modular platform for models with transverse, front engines. It began development in 2007 and was introduced last year on the seventh generation Golf and new A3. VW Group is also developing the MLB platform for models with longitudinal engines.

"The Volkswagen Passenger Cars brand is not immune to the effects of the ongoing very challenging situation on world markets,” said VW Group head of sales and marketing Christian Klinger. 

Source: Automotive News Europe