VOW Volkswagen AG

   By Matthias Goldschmidt and Ed Frankl 
 

The chief of Volkswagen's core passenger brand said the company will launch an efficiency program, restructuring its production to increase profitability.

The German carmaker is targetting a sustainable return on sales of 6.5%, from the 3% acheived in the first quarter of 2023, Volkswagen Passenger Cars' Chief Executive Thomas Schaefer said Wednesday in an internally circulated memo seen by Dow Jones Newswires.

The level of returns in the first quarter means the company "Simply cannot afford to make important investments for the future," Schaefer said. "To be truly crisis-proof, we need a sustainable return on sales of 6.5%.

He said the key level to competitive returns is the 'volume' brand group, of which Schaefer also leads, comprising the VW core brand, Skoda, Seat, Cupra and VW Commercial Vehicles, and allowing production between different marques to be more closely linked.

Plants would also be aligned by platform, rather than by brand, which determines the models which are produced in each site. These measures are expected to save a billion euros ($1.08 billion) in the coming years, and further cross-brand measures would be put in motion, he said. The VW brand also needs to become more efficient, faster and more flexible, he said.

Shares in Volkswagen were up 2.4% at 0905 GMT.

The head of the workers' council at Volkswagen, Daniela Cavallo, told Dow Jones Newswires that talks need to be held about the new efficiency program, and that profitability and safeguarding jobs are equally important.

Write to Matthias Goldschmidt at matthias.goldschmidt@wsj.com and Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

May 18, 2023 05:30 ET (09:30 GMT)

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